Why operations management is important for Organisations?

Question

Why operations management is important for Organisations?

Answer

Operations management is the control of business activities that broadly relate to production within an organisation. This can mean the purchasing, storage, movement, manufacturing, processing, packaging and shipping (among other tasks) of goods. Although operations management is typically associated with physical goods and activities, it can also relate to services and intangible activities (IOM, 2016) With the wide range of business activities that are included in operations it is clear that it is a vital function within the business. It governs essential activities such as purchasing, manufacturing and shipping, without these a business cannot operate. If these activities are undertaken without clear management then inefficiencies can easily occur, alongside quality and reliability problems. Such problems will fundamentally affect the ability of a business to make profit and to supply goods to its customers. On the other hand, good operations management can create a competitive advantage over rivals and lead a firm to success. A good example for the importance of operations management is the automotive industry. Ford represented the first major innovation in automobile manufacture – it introduced production line manufacturing for its Model T which produced the car faster and cheaper than any competitor could manage (Rae, 2016). This shows how a change in operations management can affect a business. A more modern example is the creation of Lean operations by Toyota. This approach to operations management focusses on continuous improvement and cost reductions – leading to a very efficient business. It gave the company an advantage in cost and quality, and was so significant that all large scale car manufacturers have replicated it (LEI, 2016). Clearly operations management is important for organisations – bad operations management can lead to failure, while good operations management can lead to competitive advantage and success.

References

IOM (Institute of Operations Management), 2016, What is Operations Management?, (online) available: [http://www.iomnet.org.uk/Home/WhatisOperationsManagement], accessed: 20/07/16 LEI (Lean Enterprise institute), 2016, Toyota Production System (online), available: [http://www.lean.org/lexicon/toyota-production-system], accessed: 20/07/16 Rae, J. B. 2016, Automotive Industry, Encyclopaedia Britannica (online), available: [https://www.britannica.com/topic/automotive-industry], accessed, 20/07/16