We can define Operations Administration as the area of Business Administration dedicated to both research and execution of all those actions tending to generate the greatest added value through planning, organization, direction and control in the production of both goods and of services, all aimed at increasing quality, productivity, improving customer satisfaction, and lowering costs. At a strategic level, the objective of the Operations Administration is to participate in the search for a sustainable competitive advantage for the company.
An alternative definition is the one that defines operations managers as those responsible for the production of organizations' goods or services. Operations managers make decisions that relate to the operations role and transformation systems that are used. Thus, operations management is the study of decision making in the operations function.
From these definitions it is clear that the operations management process consists of planning, organizing, managing personnel, directing and controlling, in order to optimize the production function.
The head of operations management must face ten strategic decisions, which are:
- Design of goods and services Quality management Process strategy Location strategies Organization strategies Human resources Supply management Inventory management Programming Maintenance
Operations strategy is a vision of the operations function that depends on the overall direction or drive for decision making. This vision must be integrated with business strategy and is often, but not always, reflected in a formal plan. The operations strategy should result in a consistent pattern of decision making in operations and a competitive advantage for the company.
Most authors agree that operations strategy is a functional strategy, that it should be guided by business strategy and result in a consistent pattern of decision making.
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DECISION AREAS |
SOME QUESTIONS TO ANSWER |
| Product and service design | What product or service should we offer? |
| How should we design these products or services? | |
| Quality management | Who is responsible for quality? |
| How do we define the quality we want in our service or product? | |
| Process design and capacity planning | What process will these products need and in what order? |
| What equipment and technology are necessary for these processes? | |
| Location | Where will we locate the facilities? |
| What criteria will we use to choose the location? | |
| Organization design | How will we organize the installation? |
| How big will it have to be to meet the plan? | |
| Human resources and job design | How to provide a reasonably good working environment? |
| How much can our employees be expected to produce? | |
| Supply management | Should we make a certain component or buy it? Who are our suppliers and who can be integrated into our electronic program |
| Inventory, material requirements planning and JIT | How many inventories of items should we carry? |
| When do we order again? | |
| Intermediate scheduling, short term planning and project planning | Is it a good idea to outsource production? |
| Is it better to fire people or keep them on payroll in slowdown periods? | |
| Maintenance | Who is responsible for maintenance? |
For one of the world's leading Operations Management consultants, American Roger Schroeder (Professor at the University of Minnesota) operations management is responsible for five major decision areas: process, capacity, inventory, workforce, and quality.
- Process. Decisions in this category determine the physical process or facility that is used to produce the product or service. Decisions include the type of equipment and technology, the process flow, the plant layout as well as all other aspects of the physical facilities or services. Many of these process decisions are long-term and cannot be reversed easily, particularly when a strong capital investment is needed. Therefore, it is important that the physical process is designed in relation to the company's long-term strategic posture. Capacity. Capacity decisions are directed at supplying the right amount of capacity, in the right place, at the right time. Long-term capacity is determined by the size of the physical facilities being built. In the short term, capacity can sometimes be increased through subcontracts, additional shifts, or space leasing. However, capacity planning determines not only the size of the facilities but also the appropriate number of people in the operations role. Personnel levels are adjusted to meet the needs of market demand and the desire to maintain a stable workforce. In the short term, available capacity should be allocated to specific tasks and operating positions through scheduling of people, equipment and facilities.Inventories. Decisions on operating inventories determine what to order, how much to order, and when to request it. Inventory control systems are used to manage materials from their purchase, through raw material, product in process and finished product inventories. Inventory managers decide how much to spend on inventories, where to put materials, and many more related decisions. They manage the flow of materials within the company. Work force. People management is the most important decision area in operations, because nothing is done without the people who make the product or provide the service. Decisions about the workforce include selection, hiring, firing, training, supervision, and compensation. These decisions are made by operations line managers, often with the assistance or in conjunction with human resources management. Managing the workforce productively and humanely is a key task for the operations role today. Quality. The operations function is almost always responsible for the quality of the goods and services produced. Quality is an important operational responsibility that requires the full support of the organization. Quality decisions must ensure that quality is maintained in the product at all stages of operations: standards must be established, equipment designed, people trained, and the product or service inspected for a quality result.
Careful attention to these five decision-making areas is key to managing successful operations.
Modern operations management works on three fundamental aspects:
- Total quality, understood as compliance with the specifications generated in response to the requirements of customers and consumers. Scientific management involves making fact-based decisions, which includes knowledge of variations, a process-centered approach, and systemic analysis. Teamwork that integrates both suppliers and customers into its processes.
Operations managers not only work in goods-producing companies, they also work in service industries. For private service industries, operations managers are employed in hotels, restaurants, airlines, banks, and retail stores. In all of these companies, operations managers, much like their counterparts in companies that produce goods, are responsible for the supply of services.
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PRODUCERS OF GOODS AND SERVICES |
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Companies that primarily produce goods |
| Agriculture, forestry and fishing companies |
| Crops, livestock, agricultural and forestry services, hunting and fishing. |
| Mining |
| Metal, coal, oil and gas extraction, as well as mineral mining |
| not metallic. |
| Building |
| General construction contractors, heavy-duty contractors, and |
| special projects. |
| Manufacture |
| Food, tobacco, textile companies, clothing, wood, furniture, paper, |
| impressions, chemicals, petroleum, carbon products, rubber, plastics, |
| hides, stones, clay, glass, primary metals, manufactured metal products, |
| machinery, electrical and electronic equipment, transport equipment, instruments and indus_ |
| various manufacturing trias. |
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Companies that primarily produce services |
| Transport and public services |
| Railways, local passenger transport, trucks, warehouses, postal services, |
| maritime transport, airlines, pipelines, communications, electricity, gas and utili_ |
| sanitary facilities. |
| Wholesale trade |
| Perishable and non-perishable products |
| Retail trade |
| Building materials, general merchandise stores, grocery stores, |
| car dealers, gas stations, clothing and accessories stores, furniture stores |
| and household items, as well as food and beverage outlets. |
| Finance, insurance and real estate |
| Banks, credit institutions, brokerage houses, insurers and estate agents |
| estate. |
| Services |
| Hotels, personal services, business services, car repairs, |
| movies, entertainment, health, legal, educational and social services, museums, |
| zoos and clubs. |
| Public administration |
Many organizations produce a mix of goods and services. This is why it is appropriate to classify industries on a continuous scale between those that only produce goods and those that only generate services.
Operations Plan
The content of all Operations Plan revolves around the how? And with what ?, since it would be of little use to us to have identified and defined a product or service so interesting and attractive that our potential customers were all eager to own it, use it and enjoy it if later on we were not able to manufacture, market and loan it..
Furthermore, it should not be forgotten that many of the data necessary to carry out the Financial Plan must be provided by the Operations Plan. When this is not the case, the Financial Plan becomes a mere “kitchen of numbers” that, regardless of whether its apparent presentation is very complete and exact, can result in dangerously misleading data.
That is why the basic objectives of any Operations Plan are:
- Establish the most appropriate production / logistics / service processes to manufacture / market / provide the products / services defined by the Company Plan. Define and value the material and human resources necessary to adequately carry out the above processes. the basic parameters (capacities, deadlines, stocks, investments, etc.) associated with the processes and resources mentioned in the previous two points and check that they are consistent with the essential constraints and limitations imposed by the environment, the definition of business, strategies General of the same and the other components of the Business Plan (Marketing and Sales, Economic-Financial, Human Resources Plans). If such coherence does not occur, it is essential to thoroughly review the Operations Plan,for which it is necessary to bear in mind at all times the constraints and limitations. Program and assess the start-up period.
The stages for carrying out the Operations Plan are:
1. Identify the main External Conditioners, imposed by the environment.
2. Identify the main Internal Conditioning Factors, imposed by the company's own Plan.
3. Establish the most appropriate Processes and Operations.
4. Define the necessary Material Resources.
5. Define the necessary Human Resources.
6. Establish the most suitable Plant Distribution.
7. Establish the most appropriate Physical Infrastructure.
8. Establish the most suitable location.
9. Determine the Deadlines.
10. Determine Capacities.
11. Determine the Stocks.
12. Determine Unit Costs.
13. Determine the Operating Expenses.
14. Determine Investments.
15. Schedule and assess the Implementation of the Operations Plan.
Study more and better for Operations Administration
Managing the production, whether of physical goods or services, involves a commitment both to the company and to its workers, customers and consumers, and society as a whole. A company must achieve the optimum in its operation to allow the profitability objectives of its owners and investors, but also to keep jobs and even increase them, make workers have a high degree of motivation and quality of work life, generate products with high added value for their consumers thanks to a fair price and a high level of quality, and fruitful and long-term relationships with their suppliers. All this is not achieved except through work and improvement based on ethics and discipline.
Refinement begins and is followed every day through study and research. For this, the operations area requires knowledge on:
• Business Administration
• Industrial Engineering
• Productivity
• Quality
• Continuous Improvement
• Organizational Behavior
• Applied Mathematics and Statistics
• Operations Research
• Cost Management
• Problem Solving Systems and Decision Making
• Management Information and Decision Making System Decisions
• Research Methodology
• Marketing
• Corporate Finance
• Strategic Thinking
• Economy and especially Business Economics
• Training and Coaching
• Supervision
• Leadership and Motivation
• Teamwork
• Group Dynamics
• Creativity and Innovation
• Systemic Thought
• Knowledge Management
• Emotional Intelligence - Lateral Thought - NLP - Mind Maps - Etc.
Numbers and formulas count a lot, but no less important are the human and psychological aspects. Leaving creativity, innovation, emotional intelligence, group dynamics or teamwork, among others, aside, is to condemn the company to incompetitiveness in the medium and long term. We not only work with physical elements, such as supplies, machinery and equipment, but also with people, who are the ones that make the difference between one company of excellence and the others. It is their creativity, their capacity for innovation, their capacity for change and adaptation, their spirit of improvement, which distinguishes companies that have clear competitive advantages.
This knowledge becomes much more necessary when it comes to consulting, which will require the ability to guide, advise, and help solve problems and make complex decisions.
Why study Operations Administration?
Operations Management is one of the three main functions of any organization and is fully related to the other business functions. All organizations market, finance and produce, for which it is essential to know how the organizations' operations / production area works. That is why we study how people organize themselves to produce, and the way in which goods and services are generated. Elsewhere we study Operations Management because it is an expensive portion of an organization.
Mission and Strategy in pursuit of productivity
To achieve an effective production function, the organization must have a mission and a strategy. The organization's mission is defined as its purpose, which will contribute to society. This purpose is the raison d'être of the organization, that is, its mission. A mission must be established in light of the opportunities and threats in the environment, and in the strengths and weaknesses of the organization. Developing an excellent strategy is not easy, but it is less complex as the mission is well defined.
On the other hand, the strategy constitutes the action plan that the company uses to achieve its objectives (mission).
A successful Operations Management strategy should answer questions such as:
- Under what economic and technological conditions does the company try to execute its strategy? What are the advantages and disadvantages of the competitors? What are they trying to do What is the company trying to do? What stage of the life cycle are the company's products and services?
The Seven Zeros and the Elimination of Waste
The Operations Administration has a fundamental role in the continuous search, and incessant in the search for the Seven Zeros:
• Zero stock / inventories
• Zero papers
• Zero waits / delays
• Zero breakdowns
• Zero failures
• Zero accidents
• Zero contamination
This continuous search for improvement fits in with the urgent need to detect, prevent and eliminate waste, something that is becoming increasingly popular due to the scarcity of resources, as well as environmental and ecological problems, added to the extremely high degrees of competitiveness. There is no longer room for those companies that want to survive and succeed in a certain field of activity subject to external pressures. Eliminate waste through greater efficiency of activities, eliminating on the other hand those that do not generate value, implies a higher level of productivity for the company, and with it a greater competitive advantage in the markets.
It is up to the Operations Manager to take over these responsibilities, adopting for this purpose all those decisions necessary to generate the best quality products and services, at the lowest cost and with the best delivery and services (QCD).
In the new context of the world economy, the Operations Manager must be a champion of continuous improvement.
New approach to production policy
In order to achieve the profitability of companies under current market conditions, production policies are guided by the following criteria:
• Product flexibility and production processes.
• Product quality and reliability.
• Predictability and reliability of the process.
• Product integration, process and organization.
• Reduction of response times for the launch of new products.
• Elimination of the not strictly necessary expense.
• Reduction of preparation and waiting times.
• Automation of processes.
• Increased global productivity.
To respond to these criteria, the operating characteristics of the new factories are as follows:
- The economical lot quantity approaches one unit. The dispersion and variety of the product range is not penalized for extra costs in the production stage. They decrease to the point of almost disappearing the costs of direct labor, so the total costs are very sensitive to the overall volume of production, within a joint cost economy. Operation without direct personnel and without regulatory stocks. Extensive and expensive pre-production activities. Quick responses to design changes and market demand. High levels of precision, reliability and quality.
All of these features fall within the term of flexible manufacturing.
The flexible factory
A flexible factory comprises processes under automatic control capable of generating a wide variety of products within a certain range, making use of a technology that helps to optimize manufacturing with better response times, lower unit cost and higher quality, through better control and management systems. Flexible manufacturing is the most powerful production tool available to a company today to improve its competitive position in today's industrial environment.
Within a flexible manufacturing plant are:
a) Automatic production equipment with automatic change of parts and tools that allows them to work autonomously, without the need for operators at the foot of the machine, for long periods of time that at least covers a work shift, usually at night.
b) An automatic maintenance and transport system, both for parts and tools, both between machines and between them and warehouses.
c) A random entry of different parts within a predetermined more or less wide range, with their identification systems and, correspondingly, a selection of suitable manufacturing processes.
d) A computerized monitoring and control system for the coordination of the entire process.
e) A management system for materials, machines, tools, within the current philosophy of "just in time", total productive maintenance and kaizen.
This new production system is the new challenge to which the managers of the production area must respond and act accordingly. Flexible manufacturing encompasses a wide variety of concepts and encompasses all the functions of a workshop. It is really a “manufacturing system” specially designed to improve the productivity of a workshop while preserving its universality.
Bibliography
Principles of Operations Management - Render and Heizer - Prentice Hall - 1996
The New Economy - WE Deming - Díaz de Santos - 1997
Productivity management - Prokopenko - Limusa - 1997
Calitividad - York - Marcombo - 1994
The Flexible Factory - Rafael Ferré Masip - Marcombo - 1988
Industrial production. Your administration - Lockyer - Alfaomega - 1998
Production and Operations Administration - Bufa and Sarin - Limusa - 2000
Production and Operations Administration - Gaither and Frazier - Thomson - 2000
Operations and Production Administration - Noori - McGraw Hill - 1997
