5.1 The role of operations management

factors of production

are the resources needed to produce a good or service, namely land, labour, capital and enterprise.

operations management definition

focuses on designing, controlling and improving the processes used in the production of goods and services. It involves overseeing the entire production process

factors of operations management

• designing and improving processes (lean production)

• capacity planning

• stock management (work-in-progress)

• supply chain movement

• quality control (quality assurance)

• continuous improvement (kaizen)

• scheduling logistics

sectors of operations

primary, secondary, tertiary, quaternary

primary sector

the extraction of raw materials, harvesting of crops and rearing of animals, such as mining, agriculture and fishing. 

secondary sector

This involves production processes to turn natural resources into processed or finished goods, such as steel production and car manufacturing.

tertiary sector

This refers to the provision of services, such as finance, insurance, travel and tourism, transportation and healthcare.

quaternary sector

This refers to the provision of intellectual and knowledge-based activities and involves

the generation and sharing of information, such as ICT, R&D, and consultancy services

and scientific research.

production process

refers to the method of turning factor inputs into outputs by adding value in a cost-effective way 

productivity

a measure of a firm's operational efficiency level, calculating the rate at which inputs (factors of production) are transformed into outputs (good and services).

the practice of enabling production and consumption of goods and services for the people of today without compromising the needs of future generations.

value added

ccurs during the production process when the value of output is greater than the costs of production. Firms earn profit if value added exists in the production process.