Objectives of Operations Management

1.7.2 Objectives of Operations Management

Objectives of operations management can be categorised into customer service and resource utilisation.

CUSTOMER SERVICE

The first objective of operating systems is the customer serivce to the satisfaction of customer wants. Therefore, customer service is a key objective of operations management. The operating system must provide something to a specification which can satisfy the customer in terms of cost and timing. Thus, primary objective can be satisfied by providing the ‘right thing at a right price at the right time’.

These aspects of customer service—specification, cost and timing—are described for four functions in Table 1.2. They are the principal sources of customer satisfaction and must, therefore, be the principal dimension of the customer service objective for operations managers.

TABLE 1.2 Aspects of customer service

Principal function	Principal customer wants
	Primary considerations	Other considerations
Manufacture	Goods of a given, requested or	Cost, i.e., purchase price or cost of obtaining
	acceptable specification	goods. Timing, i.e., delivery delay from order or request to receipt of goods.
Transport	Management of a given, requested or acceptable specification	Cost, i.e., cost of movements. Timing, i.e., 1. Duration or time to move. 2. Wait or delay from requesting to its commen‑ cement.
Supply	Goods of a given, requested or acceptable specification	Cost, i.e., purchase price or cost of obtaining goods. Timing, i.e., delivery delay from order or request to receipt of goods.
Service	Treatment of a given, requested or acceptable specification	Cost, i.e., cost of movements. Timing, i.e., 1. Duration or time required for treatment. 2. Wait or delay from requesting treatment to its commencement.

Generally an organization will aim reliably and consistently to achieve certain standards and operations manager will be influential in attempting to achieve these standards. Hence, this objective will influence the operations manager’s decisions to achieve the required customer service.

RESOURCE UTILISATION

Another major objective of operating systems is to utilise resources for the satisfaction of customer wants effectively, i.e., customer service must be provided with the achievement of

effective operations through efficient use of resources. Inefficient use of resources or inadequate customer service leads to commercial failure of an operating system.

Operations management is concerned essentially with the utilisation of resources, i.e., obtaining maximum effect from resources or minimising their loss, under utilisation or waste. The extent of the utilisation of the resources’ potential might be expressed in terms of the proportion of available time used or occupied, space utilisation, levels of activity, etc. Each measure indicates the extent to which the potential or capacity of such resources is utilised. This is referred as the objective of resource utilisation.

Operations management is also concerned with the achievement of both satisfactory customer service and resource utilisation. An improvement in one will often give rise to deterioration in the other. Often both cannot be maximised, and hence a satisfactory performance must be achieved on both objectives. All the activities of operations management must be tackled with these two objectives in mind, and many of the problems will be faced by operations managers because of this conflict. Hence, operations managers must attempt to balance these basic objectives.

Table 1.3 summarises the twin objectives of operations management. The type of balance established both between and within these basic objectives will be influenced by market considerations, competitions, the strengths and weaknesses of the organization, etc. Hence, the operations managers should make a contribution when these objectives are set.

TABLE 1.3 The twin objectives of operations management

The customer service objective. To provide agreed/adequate levels of customer service (and hence customer satisfaction) by providing goods or services with the right specification, at the right cost and at the right time.

The resource utilisation objective. To achieve adequate levels of resource utilisation (or productivity) e.g., to achieve agreed levels of utilisation of materials, machines and labour.

1.8	MANAGING GLOBAL OPERATIONS

The term ‘globalization’ describes businesses’ deployment of facilities and operations around the world. Globalization can be defined as a process in which geographic distance becomes a factor of diminishing importance in the establishment and maintenance of cross border economic, political and socio-cultural relations. It can also be defined as worldwide drive toward a globalized economic system dominated by supranational corporate trade and banking institutions that are not accountable to democratic processes or national governments.

There are four developments, which have spurred the trend toward globalization. These are:

1.      Improved transportation and communication technologies;

2.      Opened financial systems;

3.      Increased demand for imports; and

4.      Reduced import quotas and other trade barriers.

When a firm sets up facilities abroad it involve some added complexities in its operation. Global markets impose new standards on quality and time. Managers should not think about domestic markets first and then global markets later, rather it could be think globally and act

locally. Also, they must have a good understanding of their competitors. Some other important challenges of managing multinational operations include other languages and customs, different management style, unfamiliar laws and regulations, and different costs.

Managing global operations would focus on the following key issues:

� To acquire and properly utilize the following concepts and those related to global operations, supply chain, logistics, etc.

� To associate global historical events to key drivers in global operations from different perspectives.

� To develop criteria for conceptualization and evaluation of different global operations.

� To associate success and failure cases of global operations to political, social, economical and technological environments.

� To envision trends in global operations.

� To develop an understanding of the world vision regardless of their country of origin, residence or studies in a respectful way of perspectives of people from different races, studies, preferences, religion, politic affiliation, place of origin, etc.