Relationship between operations management and other organisational functions

Key Functions of Operations Management – MIT School of Distance Education

relationship between operations management and other organisational functions

Now that we know the role of the operations management function and the let's look at the relationship between operations and other business functions. Defining Operations Management. Every business is managed through multiple business functions each responsible for managing certain. Some of the key functions of an Operations Manager includes: organising, directing and controlling all the activities of an organisation which help them to optimise the resources and have a competitive edge over others.

They apply ideas and technologies to increase productivity and reduce costs, improve flexibility to meet rapidly changing customer needs, assure a safe workplace for all employees, and when possible assist in assuring high-quality customer service.

What Is the Relationship of Operations Management to the Overall Organizational Strategy?

For the most part, the title "Operations Manager" is used in companies that produce a tangible good—manufacturers on the whole. In service-oriented businesses, the person responsible for the operations manager role is often called by another name, one that addresses the service being offered.

Examples include project manager, consultant, lawyer, accountant, office manager, datacenter manager, etc. Designing the System Designing the system begins with product development. Product development involves determining the characteristics and features of the product or service to be sold. It should begin with an assessment of customer needs and eventually grow into a detailed product design.

OM ACROSS THE ORGANIZATION - Operations Management: An Integrated Approach, 5th Edition [Book]

The facilities and equipment used in production, as well as the information systems needed to monitor and control performance, are all a part of this system design process.

In fact, manufacturing process decisions are integral to the ultimate success or failure of the system. Of all the structural decisions that the operations manager makes, the one likely to have the greatest impact on the operation's success is choice of the process technology. This decision answers the basic question: How will the product be made?

Product design is a critical task because it helps to determine the characteristics and features of the product, as well as how the product functions.

relationship between operations management and other organisational functions

Product design determines a product's cost and quality, as well as its features and performance. These are important factors on which customers make purchasing decisions. In recent years, new design models such as Design for Manufacturing and Assembly DFMA have been implemented to improve product quality and lower costs.

DFMA focuses on operating issues during product design. This can be critical even though design costs are a small part of the total cost of a product, because, procedures that waste raw materials or duplicate effort can have a substantial negative impact on a business's operating profitability.

QFD is a set of planning and communication routines that are used to improve product design by focusing design efforts on customer needs.

Process design describes how the product will be made.


The process design decision has two major components: The technical component includes selecting equipment and selecting a sequence for various phases of operational production. The scale economy or business component involves applying the proper amount of mechanization tools and equipment to make the organization's work force more productive.

Facility design involves determining the capacity, location, and layout for the production facility. Capacity is a measure of an company's ability to provide the demanded product in the quantity requested by the customer in a timely manner.

relationship between operations management and other organisational functions

Figure The transformation role of operations management At a manufacturing plant the transformation is the physical change of raw materials into products, such as transforming steel into automobiles, cloth into jackets, or plastic into toys.

This is equally true of service organizations. At a university OM is involved in organizing resources, such as faculty, curriculum, and facilities, to transform high school students into college graduates.

relationship between operations management and other organisational functions

At an airline it involves transporting passengers and their luggage from one location to another. As a result it is directly responsible for many decisions and activities that give rise to product design and delivery problems.

The design and management of operations strongly influence how much material resources are consumed to manufacture goods or deliver a service, making sure that there is enough inventory to produce the quantities that need to be delivered to the customer, and ensuring that what is made is in fact what the customer wants. Many of these decisions can be costly. It is for this reason that OM is a function companies go to in order to improve performance and the financial bottom line.

Operations Management Defined | Defining Operations Management | InformIT

Differences in Manufacturing Versus Service Operations All organizations can be broadly divided into two categories: Although both categories have an OM function, these differences pose unique challenges for the operations function as the nature of what is being produced is different. There are two primary distinctions between these categories of organizations.

First, manufacturing organizations produce a physical or tangible product that can be stored in inventory before it is needed by the customer.

Service organizations, on the other hand, produce intangible products that cannot be produced ahead of time. Second, in manufacturing organizations customers typically have no direct contact with the process of production. Customer contact occurs through distributors or retailers.

  • Operations Management: An Integrated Approach, 5th Edition by Nada R. Sanders, R. Dan Reid
  • Key Functions of Operations Management
  • Operations Management Defined

For example, a customer buying a computer never comes in contact with the factory where the computer is produced. However, in service organizations the customers are typically present during the creation of the service. Customers here usually come in contact with some aspect of the operation. Then the operations system will convert the transformed resources from inputs into outputs that are goods and services which produced by company and after that will get feedback information about the activities in the operation system.

The operations function can be connected to other functional operations within organization such as marketing, finance, human resource and etc.

The operations manager is the person who supervised the production, make decision on operations processes and regarding to connecting into other functional areas.

Thus, today every company realized that operations management is important and also agreed that is the main core function to organize their organization. The right kind of products and good designs of the products are crucial for the success of an organizing.

Techniques like value engineering may be employed in creating alternate designs, which are free from unnecessary features and meet the intended functions at the lowest cost. Process selection and planning: Process selection decisions include decisions concerning choice of technology, equipment, machines, material handling systemsmechanization and automation.

Process planning involves detailing of processes if resource conversion required and their sequence. Plant location decisions are strategic decisions and once plant is set up at a location, it is comparatively immobile and can be shifted later only at a considerable cost and interruption of production.

relationship between operations management and other organisational functions

Although problem of location choice does not fall within preview the production function and it occurs infrequently, yet it is of crucial importance because of its major effect on the performance of every department including production.

Locational decisions involve evaluation of locational alternatives against multiplicity of relevant factors considering their relative importance to the organization and selecting those, which are operationally advantageous to the organization.

Facilities Plant layout and materials handling: Plant layout is concerned with relative location of one department Work center with another in order to facilitate material flow and processing of a product in the most efficient manner through the shortest possible time.

A good layout reduces material handling cost, eliminates delays and congestion, improves co-ordination, provide good housekeeping etc. Capacity planning concerns determination and acquisition of productive resource to ensure that their availability matches the demand.

Capacity decisions have a direct influence on performance of production system in respect of both resource productivity and customer service i.

relationship between operations management and other organisational functions

Excess capacity results in low resource productivity while inadequate capacity leads to poor customer service. Capacity planning decisions can be short-term decisions.

Operations Management and It’s Objectives

Short-term capacity planning decisions concern issues like overtime working, sub-contracting, shift adjustments etc. Break-even analysis is a valuable tool for capacity planning. Production planning is the system for specifying the production procedure to obtain the desired output in a given time at optimum cost in conformance with specified standard of quality, and control is essential to ensure that manufacturing takes place in the manner stated in the plan.