OPERATIONS IN AN ORGANIZATION

Copyright 2015 Indian Institute of Management Bangalore

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 OPERATIONS IN AN ORGANIZATION

Operations in a Manufacturing Organization

A manufacturing firm essentially engages in converting several inputs into products that are
useful for individuals and organisations. For example, a manufacturer of household appliances
such as washing machines and refrigerators employs several production workers, buys raw
material and components from various suppliers and manufactures the appliance in a factory
using a host of manufacturing facilities. In this case the factory encompasses a large number of
inter-related conversion processes for transformation of the raw material into the final product,
viz., the machine tool.

Operations in a Service Organization

In contrast to a product organization, a service
organization addresses the requirements of its
customers using a service delivery system and
provides the required services. Service
organizations respond to the requirements of
customers to satisfy some needs and leave certain
experiences in the minds of the customer through
a service delivery process. Typical examples
include management consulting, automobile
garage, hotels, hospitals and banks. A service
organization may not always make use of material
inputs and may not always produce products that are used by the customer. If you consider a
law firm providing legal consulting to its clients, there may not be material inputs to the system
and material output. Instead, the input and output are informational and experiential in nature.
On the other hand, in the case of other service systems such as an automobile garage, a
restaurant and a health care system there are material inputs and material outputs (in the form
of products consumed by the customers, as in the case of a restaurant). Despite this difference,
service systems also have a conversion process that utilizes resources and delivers useful
output from the system.

An operations system is defined as one in which several activities are performed to transform a
set of inputs into useful output using a transformation process. Viewed in this manner, we can
say that manufacturing and service systems could be broadly classified as operations systems.
Operations Management is a systematic approach to address all the issues pertaining to
the transformation process that converts some inputs into outputs that are useful, and
could fetch revenue to the organization.

Copyright 2015 Indian Institute of Management Bangalore

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 OPERATIONS IN AN ORGANIZATION

Four aspects of this definition merit closer attention are:

1. A systematic study requires identification of issues and problems to be studied,

establishing measures of performance, collecting relevant data, and solving various
problems encountered using scientific tools and techniques. This may call for developing
solution methodologies to address the problem on hand.

2. The second aspect of operations management pertains to addressing several issues that
an organization faces. These issues vary markedly in terms of the time horizon, the
nature of the problem to be solved and the commitment of resources required. Simple
problems include deciding how to allocate capacity in a service outlet to handle a surge
in demand in a service system. On the other hand, decisions such as where to locate the
operating unit, what capacity to build in the system and what types of products and
services need to be offered to the customers require greater commitment of resources
and time. Operations management provides alternative methodologies to address such
wide-ranging issues in an organization.

3. Transformation processes are central to operations system. The transformation process

ensures that inputs are converted into useful output. Therefore, the focus of the
operations management discipline is to address various aspects of design of the
transformation process and planning and operational control.

4. Finally the goal of operations management is to ensure that through careful planning
and control of the operations the organization is able to keep costs to the minimum and
obtain revenue in excess of costs. In order to ensure these appropriate metrics for
performance evaluation are required. Therefore, operations management discipline also
involves development of performance metrics and methods by which the operating
system could make improvements to meet targeted performance measures.

Copyright 2015 Indian Institute of Management Bangalore

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