Operations related to organization

Discuss about the Guide to Manufacturing and Service Operations.

Operation management is the function of the business which is responsible for managing the process of creation of the goods and services. It includes various functions such as planning, organizing, coordinating, and controlling all the resources of the organization which are required for the purpose of producing goods and services of the organization. Operation management can be considered as management function which involves managing of people, equipment, information, technology, and resources which are required in the production chain. It can be said that operation management is the central core function of every organization, regardless of company’s size, industry, etc.  

This can be understood through an example of a pharmaceutical company such as Merck. Operation functions of this company is responsible to design all the functions which plans and coordinates all the resources needed to design, produce, and deliver the various pharmaceuticals to hospitals, pharmacies, and other locations where needed. Operation management is the key to the business because it is not possible to produce the goods for selling the consumers.

This report states various components of operation managementin different organizations and how these components are related to the decision making and value chain. Evaluate, apply, and state the principles and quantitative methodologies which help in decision making in operations process planning, scheduling and inventory management. Also critically evaluate the role played by operations management in the strategic management of organizations and supply chains Output/Deliverable and parameters of the assessment. Lastly, paper is concluded with brief conclusion.

Operations Management is considered as an activity of managing the resources which help in delivering and producing the products and services. The operations function is the part of the organization, and this function is responsible for production activity. Operation function is embedded in every kind of organization which is engaged in production and manufacturing. However, it must be noted that not every organization called this function as operations management. Managers of operations functions are those people who own specific responsibility for managing some or all kind of resources which are related to production and manufacturing.  In some organizations operations managers are also known as ‘fleet manager’ in a distribution company, the ‘administrative manager’ in a hospital, or the ‘store manager’ in a supermarket (Sanders, 2013).

Operation functions are considered as most important function in the organization because it produces the goods and services, and because of these goods and services organization exists. It must be noted that operation management includes other functions also, and these functions are stated below:

• Marketing function: this function also includes sales, and marketing function is responsible to communicate the products and services of the organization to the market for the purpose of creating the request of consumers in terms of products and services. As stated above, there are number of Pharmaceuticals Company which tries to introduce their products to the consumers through different ways. The main marketing function of Merck is to provide appropriate and balanced information of the product to physicians and other health care providers (Merck, 2017).
• Product/service development function: this function is responsible for creating the new and modified products for the purpose of meeting the future expectations of consumer. Merck ensures various innovations in its products such as changes made in the density and formula of the medicines. Merck also make different innovations for the purpose of fighting with the new diseases and health care problems.
• Operations function: this function is responsible for fulfilling the request made by consumers in terms of services by producing and delivered the products and services. Operational plan of Merck includes various actions such as conversion of products, assemble of products, packaging of products and maintenance (INC, n.d.).

Components are related to the decision making and value chain

The basic three components of operation management are inputs, transformation processes and outputs. Operation management involves the systematic process and control which help in transforming the resources into finished goods and services for consumers and clients. This process is known as ‘input-transformation-output’ process which is used by every organization for producing goods and services by changing inputs into outputs. This process is also known as general transformation process model. Operation management is the process which takes set of resources for the purpose of transforming something or transformed themselves into the outputs which are products and services. Therefore, all the operations are directly related to this general input–transformation–output model, but they are differing in the nature of their specific inputs and outputs. Basic components in detail are stated below:

• Inputs: inputs are considered as transformed resources, and these resources are treated, transformed, and converted in process. It includes materials, information, and consumers. It must be noted that input resources area always dominant in position. The most important resources for Merck are Research development cost which results in successful output of drug.
• Output resources: it must be noted that products and services are different in nature, and the most obvious different is the tangibility which means products are tangible in nature but services are intangible in nature. It must be noted that services are shorter in nature and for particular time period, and products can usually be stored at least for particular time.

How do you change the input resources of the business in the outputs in such manner that it has greater value as compared to the original cost occurred at the time of creating those outputs? This question is considered to the fundamental importance of the companies as it address the logic related to economic as it describes the reason of existence of the organization (Google, n.d.).

It must be noted that manufacturing companies create the value by getting the raw materials and then converted those raw materials in some useful product. Then such products are bring by the retailer for the purpose of presenting them in such manner that it becomes convenient for customers to purchase it, and sometimes these products are supported by services also such as fitting, free advice, etc. value created and captured by the company is known as the profit margin, and it is stated as follows:

Value Created and Captured – Cost of Creating that Value = Margin.

If organization creates more value then it becomes more profitable, and if organization provides more value to the consumers then in such case it builds competitive advantage. Understanding the process through which company can create the value and looking for other ways to add more value are the critical elements while developing the competitive strategy. Michael Porter discusses the relation between operations and value chain in his influential 1985 book “Competitive Advantage. This was the book in which Porter first introduced the concept related to value chain (IFM, 2017; Hariss, 2015).

As per Porter, value chain is considered as set of activities that was carried out by the organization for the purpose of creating vales for customers. Porter also stated that main aim of value chain is to examine all the activities of the company, and the connection between those activities. The manner in which activities related to value chain are performed directly affects the cost and profit of the company. Therefore, this tool helps the organization in understanding the sources through which value can be created.

Evaluate the principles related to operations planning process

Porter also states the primary activities which are directly related to the physical creation, sale, maintenance and support of a product or service. Primary activities include inbound logistics, operations, outbound logistics, marketing & sales, and lastly services.

As stated operation is one of the primary activities of the value chain, and it includes transformational activities which transform the inputs into outputs, and these outputs are sell to consumers. It must be noted that operations systems create the value for the organization.

In case of Merck Pharmacy, value chain includes various important steps and these steps are stated below:

• Manufacturing- first step of Pharmaceuticals value chain includes the production of medicine, and it includes the research & development and also regulatory approval which allowed the medicine to be sold in the market for the purpose of final commercial transaction.
• Distribution- second step of value chain includes the transportation and handling of the medicine from the door step of manufacturer to the door step of end user. It must be noted that complexity related to transportation completely depends on the location of the manufacturing unit. It also includes handling requirements of the product, geographic requirement of the end user, etc.
• Dispensing- providing the correct medicine dosage and form to the right patient in a convenient and timely manner is the final step of the value chain of Merck Pharma (IMS, 2014).

Operation process planning states the procedure through which product is to be manufactured and because of this it is considered as key element in the process of manufacturing. It play important role in determining the cost of components and also affects the activities related to factory, competitiveness of company, planning related to production, production efficiency, and product quality. Process planning is considered as link between the design and manufacturing, and it includes various level of process planning activities. It must be noted that few years back in product engineering and development, process planning mainly aims to determine the general method of production, and this selected general method directly affects the design constraint. In the last stages related to design, it is necessary for designer to consider the ease of manufacturing for making the product economic in nature. It must be noted that only part of design data is transferred from engineering to manufacturing and in this process planners develop the package of detailed work for manufacturing a part. Dimension and tolerations are also determined at each stage while processing the workpiece (WWF, 2007). Process planning also considers the sequence related to operation and how to utilize the tools of machine. It also specified the cutting tools, fixtures, gauges and other accessory tooling.

Various organizations wants to become leaner and more productive, and for thee organizations it is necessary that they must make adjustments in their operations and to avoid the repetitive and unnecessary steps. However, mangers of operations department must consider that changes made in process planning affects all the employees such as customer service representative to the picker on a production line. It is clear from the above scenario that decision taken by operation managers affects day to day performance of the organization either in negative way or positive way. Following are the principles and quntitative methodologies which assist in decision making in operation process planning:

• Checking resources- while making changes in the operation process planning and while taking the decision, it is necessary to check the availability of resources. In other words, while taking the decision related to process planning, mangers of operation department must check that required tools, resources, products are available for the purpose of facilitating the change. During this decision making step, budgetary consideration is provided and initial cost estimates are made. It can be said that, this step related to the decision-making process involves research and reconnaissance. Merck must
• Scheduling changes- operation manager must determine the time which is suitable for applying the proposed change and this can be understood through example which states a small business that ships products from central warehouse must not overhaul the equipment of warehouse during a peak sales season, like the holidays. It is necessary for decision makers must schedule changes during low production periods and also assign realistic timelines for the proposed changes. Managers of operation department must verify that schedule is realistic in nature with a start and finish date.
• Asking analytical questions: managers must ask analytical questions at the beginning stage of the decision-making process. Answer related to these questions either qualify or disqualify a proposed change in operation process. It is the duty of the person who proposed the changes to organize and quantify the information, and present their findings to the group. While discussing with the group leaders must ask what if questions and must present the scenarios that deal with potential issues and problems. Managers must evaluate the questions and answers compared the current system with the system after proposed changes. This step also helps in increasing the awareness of the weakness and strength which are associated with proposed changes.
• Assigning duties- operational decisions often involve changes in staffing. When operations are altered, it is necessary to provide cross training to some employees for the purpose of preparing the employees to work with new equipment or in new roles. During the process of decision making managers must consider the qualifications and also the abilities of the candidates, and also assigned the new duties to the new roles created. While assessing the employees who are affected by the proposed change managers considered education, experience and leadership.
• Training and Partnership- it is the job of employer to sell the proposed changes to the team by providing them training. It involves engagement of employees at early stage in decision making process, and it also helps the mangers by creating the sense of ownership in the upcoming changes. There are some cases in which operation leadership cancel the changes which are already implemented if they believe that employees of the organization are not prepared for new equipment or software. Operational leaders may provide the facility related to training workshops or hire a new employee which has knowledge related to these aspects so that he/she can provide training to others for the purpose of implementing the new process.

Conclusion

The operations management is the most important tool of the organization. Presently, methods and procedures related to operation management must react in appropriate manner to every change which occurred internally and externally. It increases the need of strategic objectives in the organization which help in maximizing the market value of the organization, competitiveness maintaining or increasing, profitability, or in the survival of the organization.

It must be noted that activities related to operation process are heterogeneous in nature, and these activities must be conducted in effective and efficient manner for the purpose of reducing its impact on environment.  In other words, operation management activities must be conduct in such manner as it does not damage and distress the environment. Environment protection in context of operation management is complex in nature, and because of this it requires effective and efficient method for conducting the activities related to operation management.

A rapid process of product innovation in today’s market provides the impression that this process is messy in nature and also risky in context of environment. Organization rapidly deals with the changing expectations of the consumer and for providing innovative products to the consumer; organizations rapidly neglect the impact of their activities on the environment. Innovations scared the organizations because there is pressure from top level to meet the quarterly numbers present promised by management and this lead to negative impact on environments because for meeting these numbers experts opt such ways which are not friendly with the environment. All such activities result in higher failure in terms of innovation initiative calls because organization fails to examine the concepts stated by strategic management. It must be noted that strategic process is the most important part of the organization and by adopting the approach related to the strategic management organization can gain various competitive advantages. Therefore, there is need that organization must frame such process which helps in innovating the products and services of the organization by ensuring sustainability (Horvathova, & Davidova, 2011).Merck Pharm consider all these points while ensuring strategic management through its operation plan process:

Innovation is considered as result of the desire of organization to change, improve, and characterize its own structure for the purpose of meeting the expectations of the customer. Innovation has various side effects such as uncertainty and risk. Merck also ensure innovation in its medicines for the purpose of providing best medicine to its consumers at time.

It must be noted that desire to bring change can also be related to internal environment of organization and these changes are associated with the individual or the organization system. It also includes external changes such as changes with are related to products and services offered by organization to the consumer. Therefore, organization ensures that its research and development process become more strong and reliable.

Therefore, it can be said that innovation has capacity to change different things in different manner. As stated above, innovation must be sustainable in nature which means changes made by organization must affect the environment in positive manner. If innovation effects the environment in negative manner then it is harmful for society to make such changes (Farova, 2011).

Various organizations adopt numerous business improvements methodologies for the purpose of improving their business performance. In this context Logistics as well as supply chain management is considered as crucial factors for the organizations to obtain the competitive advantage in the market. However, it must be noted that these factors get the attention from the early period of 1980. It must be noted that concept related to supply chain is not well understood and various experts stated that there is need of clear definition and conceptual frameworks on supply chain management.

Supply chain management practices are defined as set of activities which are conducted by the organization to promote the effective management in supply chain. Supply chain of Merck Pharm for supplying the medicines are stated below:

• First step of this chain focus on raw material and packaging material, which means input resources are converted into output resources.
• Second step of supply chain includes material warehouses, which means store the input resources in the warehouse for using them in manufacturing the medicines.
• Third step of this chain includes the manufacturing units through which stored inputs are transported to the manufacturing units for the purpose of making final goods.
• Fourth step of supply chain of finished goods warehouses which includes storing the output resources (medicines) in the warehouse.
• Fifth step of supply chain includes distribute the final product to retailers and distributors.
• Lastly, products reached the consumers (Benson, 2015).

It can be said that SCM practices is very much related with the operation management and competitive advantage, as it help in examining the following questions:

• Whether organizations which have high level of SCM practices got high level of competitive advantage.
• Whether organizations which have high level of SCM practices got high level of organization performance.

After considering above facts, it is clear that operational planning process effects the strategic management and supply chain in negative manner also.

Conclusion:

After considering the above facts it is clear that operations management is the most important tool of the organization. Presently, methods and procedures related to operation management must react in appropriate manner to every change which occurred internally and externally. Operation functions are considered as most important function in the organization because it produces the goods and services, and because of these goods and services organization exists. It is an activity of managing the resources which help in delivering and producing the products and services. The operations function is the part of the organization, and this function is responsible for production activity. Operation function is embedded in every kind of organization which is engaged in production and manufacturing.

A rapid process of product innovation in today’s market provides the impression that this process is messy in nature and also risky in context of environment. Organization rapidly deals with the changing expectations of the consumer and for providing innovative products to the consumer; organizations rapidly neglect the impact of their activities on the environment. Innovation must be sustainable in nature which means changes made by organization must affect the environment in positive manner. Therefore, it is necessary that managers of operation management must consider this process seriously and effectively manage this program.

References:

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Case of the pharmaceutical industry, Working Paper, Centre for Research on Innovation.

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