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What is Operations Management?

the administration of business practicess to create the highest level of

efficiency possible within an organization.
the systematic direction control and evaluation of the entire range of
processes that thransforms input into finished foods or services.

Goods are tangible items offered to the customers or physical product that
someone will buy, meaning something you can touch

Services are intangible items offered to serve customers a skill, which can't be
physically touched or stored.

Industrial goods are bought and used by manufacturers. made up of machinery,

plants, and raw materials
Consumer goods are ready for consumption by people. are finished products.
Assembly is the process of combining individual components into a finished
product during manufacturing

An end user is a person or other entity that consumes or makes use of the
goods or services produced by businesses.

An industrial buyers individuals who purchase goods and services on behalf of

the organisations by which they are employed;and turn it into a more useful
products

Key Functions of Operations Management

Product design
is the process of ideating, developing, and refining products that meet
specific market needs and solve user problems.
Purpose:helps you design better products based on user experiences,
feedback, and market potential
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Process design
It is the process of creating and improving systems that convert inputs
into outputs.
involves understanding how work is done within an organisation and then
designing and implementing ways to improve it.
a method a company uses to understand organisational processes and
ways to improve them

Supply chain management (SCM)

is the management of the flow of goods and services, including all the
processes of turning raw materials into final products until the delivery.
Purpose:to improve efficiency, quality, productivity, and customer
satisfaction.

Quality management
is the act of overseeing all activities and tasks that must be accomplished
to maintain a desired level of excellence.
systematic approach to ensuring the delivery of products or services that
meet or exceed customer expectations consistently. This means establishing
standards, monitoring processes, and implementing corrective actions when
deviations occur.

Capacity planning
is the process of balancing demand for a good or service with the ability
of a manufacturer or organization to produce enough to meet demand
involves determining how much production capacity is required to meet
changing demand for products.
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Inventory management
refers to the process of ordering, storing, using, and selling a company's
inventory.
identify which and how much stock to order at what time

maintenance and reliability

ensure the seamless and efficient functioning of equipment, systems, and
facilities

Cost effective means achieving a desired outcome at the lowest possible

cost. It is a measure of how well the resources used are aligned with the
results achieved. A cost effective solution is one that achieves the desired
outcome while using the least amount of money

Quality Improvement
a structured approach to evaluating the performance of systems and
processes, then determining needed improvements in both functional and
operational areas

Operational innovation
is the ability of a business to improve its processes and operations in order to
increase efficiency and effectiveness. This can involve the introduction of new
technology, processes, or management methods, and can lead to increased
productivity and competitiveness for the company.

Logistics operations is an essential part of the supply chain and refers to the
process of moving finished goods, starting from the manufacturer and moving to
the end user. The entire inbound and outbound logistics process consists of
managing ecommerce inventory, and fulfilling and shipping orders to meet
customer requirements in a timely, cost-effective manner.

Importance of Operations Management

These include high-quality goods and services, satisfied customers, motivated
and productive employees, increased revenue, reduced costs, and a competitive
advantage over other companies.
helps effectively manage, control and supervise goods, services and people. It
cuts across the sector and industry.
 Forecasting stands as a systematic effort to anticipate future events based
on the patterns and information available from past data. Within the domain of
operations management, forecasting takes a significant role, acting as an
aiding tool for decision-making, strategic planning, and efficient resource
allocation.

What Are the Advantages of Inventory Management?

Better Inventory Accuracy: With solid inventory management, you know what’s
in stock and order only the amount of inventory you need to meet demand.

Reduced Risk of Overselling: Inventory management helps track what’s in stock

and what’s on backorder, so you don’t oversell products.

Cost Savings: Stock costs money until it sells. Carrying costs include storage
handling and transportation fees, insurance and employee salaries. Inventory is
also at risk of theft, loss from natural disasters or obsolescence.

Avoiding Stockouts and Excess Stock: Better planning and management helps a
business minimize the number of days, if any, that an item is out of stock and
avoid carrying too much inventory. Learn more about solving for stockouts in
our “Essential Guide to Inventory Control.”

Greater Insights: With inventory tracking and stock control, you can also easily
spot sales trends or track recalled products or expiry dates.

Better Terms With Vendors and Suppliers: Inventory management also provides
insights about which products sell and in what volume. Use that knowledge as
leverage to negotiate better prices and terms with suppliers.

More Productivity: Good inventory management solutions save time that could
be spent on other activities.

Increased Profits: A better understanding of both availability and demand leads

to higher inventory turnover, which leads to greater profits.
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A More Organized Warehouse: An efficient warehouse with items organized
based on demand, which items are often sold together and other factors
reduces labor costs and speeds order fulfillment.

Better Customer Experience: Customers that receive what they order on time
are more loyal.

Principles of Operations Management

Customer focus
is a strategy that puts your customers' needs first.
foster a company culture dedicated to enhancing customer satisfaction
and building strong customer relationships.

Continuous improvement
is an ongoing process of identifying, analyzing, and making incremental
improvements to systems, processes, products, or services.
Its purpose is to drive efficiency, improve quality, and value delivery while
minimizing waste, variation, and defects.

Total quality management (TQM)

is an ongoing process of detecting and reducing or eliminating errors.
is used to streamline supply chain management, improve customer service,
and ensure that employees are properly trained.
enables management to adopt a strategic approach to quality and put more
effort on prevention rather than on inspection.

Operational flexibility
refers to the ability to respond proactively or reactively to uncertainties
in the business environment.
they are not rigid, and can be modified by the manager as per the situation

Efficiency
It involves optimising processes, reducing waste, enhancing productivity,
and aligning all aspects of an organisation to deliver value to customers,
employees and stakeholders
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Just-in-time also known as JIT
is an inventory management method whereby labour, material and
goods (to be used in manufacturing) are re-filled or scheduled to arrive
exactly when needed in the manufacturing process.
. The main objective of this method is to reduce inventory holding
costs and increase inventory turnover.

Capacity planning
is often used to quickly solve occupancy problems. However, the
purpose of capacity planning is to achieve acceptable and agreed
service levels to your customers in a cost-effective manner.

Benchmarking
is defined as a measurement of the quality of an organisations
policies, services, programs, strategies and their comparison with
standard measurement or similar measurements of its peer, the
objectives of benchmarking are;
1. Todeterminewhatandwhereimprovementsarecalledfor.
2. To analyse how other organisations achieve their high performance
levels
3. Tousethisinformationtoimproveperformance.

Employee training and development

includes any activity that helps employees acquire new, or improve
existing, knowledge or skills.
a set of activities and programs designed to enhance the knowledge,
skills and abilities of employees. It is a continuous process that aims to
improve individual and organizational performance, foster career
growth and adapt to evolving business needs.
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Supply Chain Management
It covers everything from procurement and sourcing of raw materials to
delivery of final product to the consumer, along with the related logistics.

Sustainability
are the bedrock of effective operational planning, allowing businesses to
balance financial success with environmental and social responsibilities.
include resource efficiency, carbon reduction, waste minimization,
renewable energy adoption, responsible procurement, and more.

Cost control
is the practice of identifying and reducing business expenses to increase
profits, and it starts with the budgeting process. an important factor in
maintaining and growing profitability.
involves identifying and analyzing various cost factors, such as
operational expenses, production costs, and overheads, and implementing
measures to reduce or optimize them. It aims to strike a balance between
minimizing costs without compromising the quality of products or services

risk management
a proactive approach, systematic process, informed decisions, integrated
framework, resource allocation, transparency and communication, and
continuous monitoring and review—provide the blueprint for an effective risk
management program
refers to the fundamental guidelines and standards used to identify,
analyze, evaluate, and respond to risks within an organization.

Lean manufacturing is a methodology that focuses on minimizing waste

within manufacturing systems while simultaneously maximizing productivity.

1. Define Value
Value is what the customer is willing to pay for. It is paramount to discover
the actual or latent needs of the customer. Sometimes customers may not
know what they want or are unable to articulate it. This is especially
common when it comes to novel products or technologies. There are many
techniques such as interviews, surveys, demographic information, and web
analytics that can help you decipher and discover what customers find
valuable. By using these qualitative and quantitative techniques you can
uncover what customers want, how they want the product or service to be
delivered, and the price that they afford.
2. Map the Value Stream
identifying and mapping the value stream. In this step, the goal is to use
the customer’s value as a reference point and identify all the activities
that contribute to these values. Activities that do not add value to the end
customer are considered waste. The waste can be broken into two
categories: non-valued added but necessary and non-value & unnecessary.
The later is pure waste and should be eliminated while the former should
be reduced as much as possible. By reducing and eliminating unnecessary
processes or steps, you can ensure that customers are getting exactly
what they want while at the same time reducing the cost of producing that
product or service.

3. Create Flow
After removing the wastes from the value stream, the following action is to
ensure that the flow of the remaining steps run smoothly without
interruptions or delays. Some strategies for ensuring that value-adding
activities flow smoothly include: breaking down steps, reconfiguring the
production steps, leveling out the workload, creating cross-functional
departments, and training employees to be multi-skilled and adaptive.

4. Establish Pull
Inventory is considered one of the biggest wastes in any production
system. The goal of a pull-based system is to limit inventory and work in
process (WIP) items while ensuring that the requisite materials and
information are available for a smooth flow of work. In other words, a pull-
based system allows for Just-in-time delivery and manufacturing where
products are created at the time that they are needed and in just the
quantities needed. Pull-based systems are always created from the needs
of the end customers. By following the value stream and working
backwards through the production system, you can ensure that the
products produced will be able to satisfy the needs of customers.
5. Pursue Perfection
Wastes are prevented through the achievement of the first four steps: 1)
identifying value, 2) mapping value stream, 3) creating flow, and 4) adopting a pull
system. However, the fifth step of pursuing perfection is the most important
among them all. It makes Lean thinking and continuous process improvement a
part of the organizational culture. Every employee should strive towards
perfection while delivering products based on the customer needs. The company
should be a learning organization and always find ways to get a little better each
and every day.

Six Sigma is a set of methodologies and tools used to improve business

processes by reducing defects and errors, minimizing variation, and increasing
quality and efficiency.

The 5 Steps of Six Sigma

Define
A team of people, led by a Six Sigma expert, chooses a process to focus on and
defines the problem it wishes to solve.

Measure
The team measures the initial performance of the process, creating a benchmark,
and pinpoints a list of inputs that may be hindering performance.

Analyze
Next the team analyzes the process by isolating each input, or potential reason
for any failures, and testing it as the possible root of the problem.

Improve
The team works from there to implement changes that will improve system
performance.

Control
The group adds controls to the process to ensure it does not regress and become
ineffective once again.