Unit-1:
1.1 Introduction to Operations Management
1.2 Competitiveness, Strategy, and Productivity
1.1 Introduction to Operations Management
Operations Management (OM) refers to the administration of business practices that efficiently
and effectively manage the production and delivery of goods and services. It focuses on
optimizing internal processes to meet customer expectations, control costs, and maximize
overall productivity. OM is crucial for any organization, as it directly impacts the quality,
speed, and cost-effectiveness of goods and services offered.
Key components of Operations Management include:
1. Product Design: Creating products that meet customer needs while being cost-
effective to produce.
2. Process Design: Planning the best methods for manufacturing and delivering products.
3. Supply Chain Management: Coordinating with suppliers and ensuring materials and
components are available.
4. Inventory Management: Managing raw materials, work-in-progress, and finished
goods to avoid shortages or excess stock.
5. Quality Control: Ensuring products or services meet required standards and
specifications.
6. Production Scheduling: Managing resources, labor, and machinery to ensure timely
production and delivery.
7. Maintenance and Repair: Ensuring that machinery and equipment are functioning at
peak efficiency.
Operations management is found in various industries like manufacturing, services, retail,
healthcare, and technology, with each sector tailoring operations practices to meet its unique
challenges and goals.
1.2 Competitiveness, Strategy, and Productivity
Competitiveness refers to a company’s ability to perform better than its rivals in the market.
This involves offering products or services that are valued by customers and are delivered at
an attractive price. Competitiveness in operations management can be achieved through:
Cost Leadership: Producing goods or services at a lower cost than competitors, which
can be achieved through efficient processes, economies of scale, and cost-saving
technologies.
Differentiation: Offering unique products or services that are perceived as superior or
different from competitors, allowing the company to charge a premium price.
Focus: Targeting a specific segment of the market and serving it better than competitors
who target a broader audience.
Strategy in operations management defines the approach a company will take to achieve its
competitive goals. Strategy can involve decisions around the design of products, the layout of
production facilities, the methods of production, and how to manage inventory. Strategies
should align with broader corporate objectives and market conditions.
There are three main levels of strategy:
1. Corporate Strategy: Deals with overall company objectives and the way the company
will compete in the market.
2. Business Strategy: Focuses on how a particular business unit or division will compete
within its industry.
3. Functional Strategy: Addresses how departments like operations, marketing, and
finance will support the business strategy.
Productivity is a measure of how efficiently an organization uses its resources (like labor,
materials, and capital) to produce goods and services. It is calculated as the ratio of output
(goods and services) to input (resources). Increasing productivity is essential for a business to
remain competitive and profitable. Higher productivity means lower costs, better quality, and
faster delivery, all of which contribute to a company’s competitiveness.
Factors influencing productivity include technology, workforce skills, management
practices, and the quality of raw materials.
Improvement of productivity can be achieved through better management,
continuous improvement programs (like Six Sigma or Lean), and investing in better
technology.
In summary, operations management plays a vital role in enhancing competitiveness, setting
the direction for business strategy, and improving productivity to deliver value to customers
while maintaining profitability.
