Unit 5: Operations management



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5.1 The role of operations management
Operations management and its relationship with other business functions
Most of you are familiar with manufacturing being the process of creating goods. That's where we can start, because Operations and Management in the understanding of what the processes are to covert those goods into finished products. However, let us not forget that if we are to relate this process to all forms of business activity, we must also consider services as part of the process. In this respect, the process of delivering intangible outcomes also involves a process that needs to be understood. For example, a smiling order clerk in McDonalds is providing the services of not only bringing you food (tangible) but also enhancing your dining experience (intangible) with a smile, which is part of the service.
In this respect we can see that Operations and Management is one of the functions of the business, alongside Human Resources, Marketing, and Financial and Accounting.

Operations management in organizations producing goods and/or services
When the production process begins, factor inputs such as Land, Labor and capital are utilized in order to obtain output. The area where the production process takes place is operations and management.

Figure 1
Factors of production/Inputs



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If we are only referring to a business activity that provides services, such as a bank, hair-dresser, consultancy, travel agency or education, then the primary factor of production is labor. The process by which labor is used to production the service is the production process.
The next time you are sitting and waiting at the airport for a flight, the dentists or doctors office and you notice music playing or if a television is on – you are being engaged in the production process of a service that is being provided. Interesting right?
In the above diagram Land inputs are anything that is provided by nature. However when we refer to raw materials used to created products, we are referring to both processed and unprocessed. Therefore, even though business terminology uses the term raw material, this does not only refer to unprocessed, “raw” material inputs. For example a car battery that goes into a vehicle is a finished good but also raw material. Just like oranges before they are squeezed to make orange juice. An orange is raw material if it is used to make orange juice, but also a final product if sold as is.
Operations management strategies and practices for ecological, social (human resource) and economic sustainability