Sample Answer
Managing Operations
Introduction
Operations management lies at the heart of every business, whether in manufacturing or services. It involves the design, execution, and improvement of systems that create and deliver products or services. In an industrial city facing job losses from factory closures, understanding how operations management supports both sectors is essential for retraining and future employment. This essay explores the types of operations, the systems that underpin them, and how they connect to business performance, quality, supply chain, and administrative functions.
Task 1: Introduction to Operations Management
Types of Operations within Businesses
Operations vary according to industry type and organisational goals. In manufacturing, operations focus on the transformation of raw materials into tangible goods. Examples include car production at Toyota or furniture manufacturing at IKEA, where efficiency, quality control, and process standardisation are crucial. In contrast, service operations, such as those in hospitals, hotels, or educational institutions, revolve around intangible outputs and direct customer interaction. For instance, a bank’s operations involve processing transactions, managing data, and ensuring reliable customer service rather than producing physical goods.
Hybrid operations also exist, blending manufacturing and service aspects. A company like Apple manufactures devices (a product) but also provides after-sales services, illustrating how operations today are increasingly interconnected.
Operational Activities as Systems
Every operation, regardless of type, can be represented as a system. A system consists of inputs, processes, and outputs, with feedback loops ensuring continuous improvement (Slack et al., 2019). In a manufacturing context, inputs might include raw materials, labour, and machinery, transformed into finished goods. In a service context, inputs are often information and human skills, processed to deliver customer satisfaction.
For example, in a logistics company, orders (inputs) are received, processed (through scheduling and delivery), and output as successful deliveries. Feedback, such as delivery time data and customer satisfaction, helps refine the system. The systems approach allows managers to identify inefficiencies, optimise resource use, and ensure that each stage of the operation contributes to overall performance.
Characteristics Differentiating Operational Systems
Operational systems differ across industries based on several characteristics: tangibility, customer contact, and variability. Manufacturing systems produce tangible outputs that can be stored or inventoried, while services are intangible and consumed as produced. Services also involve higher levels of customer contact and variability, as each customer experience may differ.
Automation and technology further differentiate systems. Manufacturing systems tend to use capital-intensive processes like robotics and computer-aided design, while services often depend on information systems and human skills. For example, Amazon’s fulfilment centres are highly automated, focusing on speed and accuracy, whereas an NHS hospital relies on human expertise and real-time coordination among staff.
Task 2: Operations and Business Performance
Operations Function and Business Performance
Operations management directly influences business performance through cost efficiency, quality, flexibility, and delivery. These dimensions, known as the performance objectives of operations (Slack et al., 2019), determine a firm’s competitive advantage.
In manufacturing, operational efficiency leads to lower production costs and faster turnaround times. For instance, Toyota’s lean production system eliminates waste and ensures consistent quality, improving profitability and market share. In services, the emphasis may be on reliability and responsiveness. A hotel chain like Premier Inn, for example, achieves performance excellence by standardising procedures and maintaining consistent customer experiences across branches.
Internal Measures of Success
Businesses use various internal measures to evaluate operational performance. Common indicators include productivity, capacity utilisation, cost per unit, and delivery reliability. In services, measures may also include customer satisfaction scores, service turnaround time, and staff performance.
For instance, a manufacturing firm may track the defect rate per production batch, while a service firm might monitor average waiting times or complaint resolution rates. These internal measures allow management to align day-to-day performance with strategic goals.
Linking Measures to Business Objectives
Internal performance indicators are meaningful only when tied to broader business objectives. For example, if a company’s strategic goal is sustainability, operational measures may include energy use or waste reduction. When the goal is customer loyalty, service quality and satisfaction metrics become key.
Operations managers must therefore translate high-level objectives into measurable operational targets. For example, McDonald’s links its business goal of consistency to operational targets like food preparation time and hygiene audits, ensuring that each outlet supports brand reliability.
Operations Management and the Supply Chain
Operations management and supply chain management are interdependent. Efficient operations rely on well-coordinated supply chains to deliver materials, information, and products on time. Poor supply chain performance can disrupt operations and reduce profitability.
In manufacturing, this link is visible in just-in-time (JIT) production, where suppliers deliver materials exactly when needed. Toyota’s success in JIT illustrates how supply chain coordination minimises inventory costs while maintaining production flow. In services, supply chains may involve digital resources or outsourcing partnerships. For instance, Amazon Web Services depends on global data centres that ensure reliability and scalability of digital operations.
Operations Management and Quality Management
Quality management is a critical component of operations, as it affects reputation, cost efficiency, and customer loyalty. The relationship between operations and quality is best illustrated through frameworks such as Total Quality Management (TQM) and Six Sigma.
For example, Rolls-Royce’s manufacturing operations use TQM principles to ensure zero-defect production, while service firms like the NHS employ continuous improvement models to enhance patient outcomes. Both sectors demonstrate that quality must be built into every stage of the operational process rather than inspected at the end.
