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DP IB Business Management: HL
5.1 Introduction to Operations Management
Contents
The Purpose of Operations Management

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The Purpose of Operations Management

What is Operations Management?

Operations management focuses on designing, controlling and improving the processes used in the production of
goods and services

It involves overseeing the entire production process, from acquiring raw materials to delivering the nal
product/service to customers

The goal of operations management is to ensure that the production process is e cient, coste ective
and meets the desired quality standards

It involves making decisions related to production planning, stock management, resource allocation, scheduling
and quality control

Diagram: operations management tasks

The range of tasks for which operations management are responsible

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1. Designing and improving processes

Operations managers analyse existing processes and nd ways to optimise them

They may use tools and techniques such as process mapping and lean production to identify ine ciencies
and eliminate waste

2. Capacity planning

Operations managers determine the production capacity required to meet customer demand

They analyse historical data and market forecasts to ensure that the production resources are adequate to ful
l orders in a timely manner

3. Stock management

Operations managers are responsible for managing the stock levels of raw materials, work-inprogress and nished goods

They aim to minimise costs while ensuring that enough stock is available to meet customer demand and allow
the production process to continue without running out of resources

4. Supply chain management

Operations managers work closely with suppliers to ensure the timely delivery of raw materials and components

They establish relationships with suppliers, negotiate contracts and monitor supplier performance to ensure a
reliable supply chain

5. Quality control

Operations managers implement quality control measures to ensure that the products/services meet the required
quality standards

They develop and enforce quality assurance processes, conduct inspections and address any quality issues that
arise

6. Continuous improvement

Operations managers strive for ongoing improvement in processes, productivity and e ciency

They identify opportunities for innovation, implement new technologies or techniques and encourage a culture
of continuous improvement (Kaizen) among employees

7. Scheduling and logistics

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Operations managers develop production schedules and coordinate the ow of materials, equipment and labour to
ensure smooth operations

Operations & the Production of Goods/Services

Operations management does not only focus on the production of tangible goods/services in the secondary sector

It is equally applicable in the primary, tertiary and quaternary sectors

The input-output model is a simple explanation of the operations process

Diagram: the input-output model

The input-output model

Examples of the Input-Output Model in Di erent Sectors

Sector & Inputs Process Outputs

Example

Primary (Fishing) Bait and nets Trawl shing Quantities of fresh sh

or seafood ready for
Skilled and Pot harvesting wholesale
experienced
sheries workers

Secondary Engine parts Flow production Finished vehicles, ready for

sale to consumers
(Car Glass & paint Cell production
manufacture)
Production line
workers

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Tertiary Ingredients Baking, roasting & Prepared meal delivered to a

(Restaurant) grilling customer's table
Gas & electric
Plate presentation and
Skilled chefs table service

Quaternary Business data Market research Finished business report or

presentation to clients
(Business Specialist software Data analysis
consultancy)
Quali ed analysts

Operations & Sustainability

Sustainable operations management involves integrating sustainability practices into all aspects of the operations
management process, from sourcing materials to delivering products

There are three elements to sustainable operations management

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Diagram: sustainable operations management

Examples of sustainability considerations in operations management

There are a range of ways to improve sustainability in operations management

Examples of Sustainability Practices in Operations Management

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Method Explanation Example

Green Supply Selecting environmentally friendly suppliers, Outdoor clothing brand Patagonia uses
Chain reducing waste, and minimising the businesses sustainable materials, including organic
Management carbon footprint throughout the supply chain cotton and recycled polyester, in its
garments, follows fair labour practices
throughout its supply chain and
discloses information about its supply
chain to the public

Energy Implementing energy-saving technologies, Danone is committed to using 100%

E ciency optimising equipment and machinery and renewable energy sources, with an
reducing energy consumption wherever ambitious goal to reduce its
possible
environmental impact by 2030 and
become carbon neutral by
2050

Waste Introducing waste management systems, Fairphone designs modular

Reduction and adopting lean manufacturing principles and smartphones targeted at
Recycling designing products with a focus on environmentally-conscious consumers
recyclability and reduced material usage that enable users to replace and
through the use of eco-friendly materials and upgrade individual components easily,
designing for durability extending the life of the device

Promoting fair Ensuring healthy and safe working conditions At Google workers can bene t
labour practices through policies such as exible working, ample from free meals, nap pods and on-site
breaks, access to doctors, amongst many other facilities,
training and advice as well as physical and can even bring their pets to work!
protection such as air lters and safety
equipment in place The company monitors employee
satisfaction and happiness and has
moved to a hybrid working model,
which provides workers with exibility

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