Factors Affecting Operation Management

(Production and Operation Management)

Factors Affecting Operation Management

1. Global Competition 3. Rapid Expansion of Advance
2. Quality, Customer Service & Cost Technologies
Challenges 4. Social Responsibility Issues
1. Global Competition
Globalization - A process of interaction and integration among the people, companies, and
governments of different nations.” It is driven by a reduction in trade barriers, advancements in
information technology, and transportation technology.
Companies who compete with others abroad will have to improve quality while lowering
prices to remain competitive.
This falls on the operations manager as he or she is the one who “engages in the four
functions of planning, organizing, leading, and controlling to ensure that the product or service
remains competitive in the market.”
Global Competition
Operation managers face competition from the company across the street, as well as,
from across the country and across the world. Companies must be competitive to sell their
goods and services in the marketplace. Competitiveness is an important factor in determining
whether a company prospers, barely gets by, or fails. This competition can be related to price,
quality, product or service differentiation, flexibility, time to perform certain activities, service,
and managers and workers by companies.
• Price - is the amount a customer must pay for the products or service. Organization that
compete on price may settle for lower profit margins, but most focus on lowering costs
of goods or service.
• Quality - refers to materials and workmanship as well as design. Usually, it relates to a
buyer perceptions of how well the product or service will serve its intended purpose.
• Product or Service differentiation - refers to any special features that cause a product or
service to be perceive by the buyer as more suitable than a competitor’s product or
service.
• Flexibility - is the ability to respond to changes. The better a company or department is
at responding to changes, the greater its competitive advantage over another company
 that is not a responsive. The changes might relate to increase or decrease in volume
demanded, or to change in the design of goods or service.
• Time - refers to a number of different aspects of an organization’s operations. One is
how quickly a product or service is delivered to a customer. This can be facilitated by
faster movement of information backward through the supply chain. Another is how
quickly new products or service are developed and brought to the market.
• Service - might involve after sale activities that are perceive by customers as value
added, such as delivery, setup, warranty work, technical support or extra-attention while
work is in progress, such as courtesy, keeping the customer informed, and attention to a
little details.
• Managers and workers - are the people at the heart and soul of an organization, and if
they are competent and motivated, they can provide a distinct competitive edge by their
skills and the ideas they create. The drive to be more competitive is the importance of
ethical behaviour; it is something that all managers should adhere to and stress to their
subordinates.
2. Quality, Customer Service & Cost Challenges
Approaches to Quality
Quality affects a company in a variety of ways, from productivity and profitability to
customer satisfaction and public perception. In addition, quality affects the overall operating
costs of a company. Focusing on quality can help a business maintain a satisfied customer base.
When focusing on quality, it must be a team effort, with everyone within the company
committed to implementing any quality changes managers’ mandate. Although the initial cost
might seem expensive, the overall costs of ensuring delivery of quality products and services
might prove to be less than expected.
Approaches to maintaining quality
Quality Control –is where a product is inspected at the end by specialist quality controllers who
look for detective products. This can mean a lot of waste, so to some extent has been succeeded
by quality assurance where his product is designed and produced in a way to maximise quality.
It is the responsibility of all staff to maintain quality, not just the inspectors.
Total Quality Management
Is where the business develops a whole philosophy of quality and continually seeking
ways to improve it. It may be associated with some of the techniques raise in lean production.
All staff must be involved in it and all must see each other as their customers as well as the final
external customer. International Standards (such as ISO9901) are an independently verified
means of showing customers that the business has set procedures for ensuring quality.
Impacting Company's Profitability
Quality increases profitability. When employees are engaged in a work environment in
which teamwork is emphasized and where quality products are the goal, the work environment
flows more smoothly than one in which quality is an afterthought.
Customer Service
Customer have a large multitude of choices in the market and this affects their behaviours:

 They want to acquire goods and services quickly and in more efficient way than before.
 They also expect high quality and low prices.
All these expectations need a response from the company, otherwise sales of company will
decrease and they will lose profit and market share. A company must always be ready for price,
product and service and customer preferences because all of these are global market
requirements.
Influencing Customer Satisfaction
Quality has a direct bearing on customer satisfaction. If a company produces a quality
product, satisfied customers will rank that company higher in surveys than companies that fail
to provide quality products or services.
Cost Challenges
Directly Affecting Costs
Quality directly affects costs in a business. While using less expensive parts and
equipment might cut costs in the short term, the long-term effects might be far more expensive.
3. Rapid Expansion of Advance Technologies
Technology can be facilitating factor in bringing about change in operations and
production management. Usage of technology in operation management has ensured that
organizations are able to reduce the cost, improve the delivery process, standardize and
improve quality and focus on customization, thereby creating value for customers.
As technological innovation makes consumers want new types of products, businesses
have to adjust their operations to meet new market demands. Businesses integrate new
technologies, such as computers and software packages, into their daily operations and
production cycle and provide new products such as increased mobile compatibility for a line of
electronics.
4. Social Responsibility Issues
Social responsibility is a self-regulating business model that helps a company be socially
accountable to itself, its stakeholders, and the public. By, practicing corporate social
responsibility, also called corporation citizenship, companies can be conscious of the kind of
impact they are having on all aspects of society including economic, social, and environmental.
To engage in CSR means that, in the normal course of business, a company is operating in ways
that enhance, instead of contributing negatively to them.
Many businesses choose to get involved with non-profit organizations, to sponsor local
sports teams or to volunteer in local schools. While these can be challenging projects to
organize, a business’s community involvement gives its neighbour a sense that the company
cares about its surroundings and its customers on more than just profit level, and its raises
awareness of the business and its brand. Social responsibility, therefore, is a form of marketing
and public relations.