5.1 The role of operations management

Introduction - the nature of operations

• “Operations” or “operations management” is concerned with the use of resources called inputs (land, labor and capital) to provide outputs in the form of goods/services.

• Essentially, operations managers are aiming to produce goods and services of the required quality, in the required quantity, at the time needed, in the most cost-effective way.

Operations management: the production process

The transformation process

• The degree of value added to the inputs will depend on a number of factors - not all of them operations management issues:

  • The design of the product or the nature of the service.

  • The efficiency with which the input resources are combined and managed.

  • Being able to convince consumers to pay more for the good or service than the cost of the inputs.

Resources

• Production inputs

  • Land: water, oil, copper, natural gas, coal, forests, etc.

  • Labor: fuel, materials, buildings, equipment, etc.

  • Capital: tractor purchased for farming, desks and chairs used in an office, etc.

Ecological, social and economic sustainability - the role of operations management

• Ecological sustainability: capacity of ecosystems to maintain their essential functions and processes, and retain their biodiversity in full measure over the long term.

• Social sustainability: ability of a community to develop processes and structures which not only meet the needs of its current members but also support the ability of future generations to maintain a healthy community.

• Economic sustainability: within a business context, economic sustainability involves using the assets of the company efficiently to allow it to continue functioning profitability over time.