0% found this document useful (0 votes)
17 views

Introduction of Operations Management Written Report

The document provides a comprehensive overview of operations management, detailing its definition, importance, objectives, and scope. It discusses key components such as forecasting, total quality management, and inventory management, as well as the historical evolution of operations management from the Industrial Revolution to modern practices. Additionally, it highlights significant milestones and contributions to the field, including the assembly line, division of labor, and interchangeable parts.

Uploaded by

arjoedeguzman
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
0% found this document useful (0 votes)
17 views

Introduction of Operations Management Written Report

The document provides a comprehensive overview of operations management, detailing its definition, importance, objectives, and scope. It discusses key components such as forecasting, total quality management, and inventory management, as well as the historical evolution of operations management from the Industrial Revolution to modern practices. Additionally, it highlights significant milestones and contributions to the field, including the assembly line, division of labor, and interchangeable parts.

Uploaded by

arjoedeguzman
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
You are on page 1/ 14

LYCEUM-NORTHWESTERN UNIVERSITY

Dagupan City
INSTITUTE OF GRADUATE AND PROFESSIONAL STUDIES

In Partial Fulfillment of the Requirements for the Course


Doctor of Business Administration

BA 314 OPERATION MANAGEMENT

Introduction to Operations Management


(Written Report)

Presented to:
DR. FERDINAND L. TIMBANG
Professor

Presented by:
ARJOE S. DE GUZMAN, MM, MBA

February 2025
I. What is Operation Management and Why Does it is Matter?

Operations management executes backend business functions. It is an exciting career field that
oversees manufacturing, inventory, and quality control to prepare products for the market. Efficient
operations enable businesses to thrive and succeed.

What is operations management?


Operations management is the administration of business structure, practices, and processes to
enhance efficiency and maximize profit. It refers to the management of functions that a business
needs to run effectively day-to-day, including:
a. Overseeing multiple departments and providing goals
b. Overseeing and streamlining processes
c. Balancing revenue and costs
d. Developing strategic plans
e. Production, logistics, and supply chain

Why is operations management important?


Operations are the foundation of a business, including how it deals with supply chain and logistics.
Profits rely on lean, efficient operations. Poor business operations can threaten a business’s survival,
so processes must be optimized, the right staff needs to be employed, and physical locations must be
strategic, ethical, and safe.

Operations Management: Nature, Scope & Fundamentals

Nature of Operations Management

Operations Management is a field that focuses on the management of resources and processes to
create and deliver goods or services. It is a relatively new domain, only emerging as a different
discipline in the early 20th century. Operations management is concerned with all aspects of an
organization’s operations, including the design, planning, control, and execution of processes.

Operations management aims to ensure that the organization’s operations are efficient and effective.
This blog post will explore the nature, scope, and fundamentals of operations management. We will
also discuss some of the challenges faced by operations managers.

Before moving ahead and understanding the nature of operations management, check out our
Advanced Certificate in Operations, Supply Chain and Project Management which has all the
necessary learning resources you require to be an operations manager.

Objectives of Operations Management


Operations management is a field concerned with designing, planning, controlling, and operating an
organization’s production systems. The objectives of operations management are to:

1. Ensure that the organization’s production systems can meet customer demand.
Operations management is the process of ensuring that business operations are efficient with
regards to using as few resources as necessary and effective in terms of meeting customer demand.
The ultimate goal and nature of operations management are to improve the efficiency and
effectiveness of an organization’s operations while also reducing costs.

2. Maximize the efficiency of the organization’s production systems.


The goal of operations management is to maximize the efficiency of these production systems so
that the organization can produce goods and services more effectively and efficiently. There are
plenty of different tools and techniques that operations managers use to achieve this goal, such as
process improvement methods, quality control techniques, and work measurement tools.

3. Minimize the cost of producing goods and services.


The objective of operations management is to minimize the cost of producing goods and services
while still providing high levels of quality and customer satisfaction. One of the effective ways this
can be accomplished is by streamlining production processes and eliminating waste. Additionally,
effective operations managers will continuously look for ways to improve efficiency and
productivity to keep costs low.

4. Improve the quality of the goods and services made by the organization.
The objective of operations management is to improve the quality of the goods and services of the
organization. It can be done through a variety of means, such as improving the efficiency of
production processes, ensuring that products are produced to meet customer specifications, and
reducing waste and defects in finished products. Improving quality can lead to increased customer
satisfaction and loyalty, which can, in turn, lead to higher sales and profits for the organization.

5. Increase the flexibility of the organization’s production systems.


Operations management strives to increase the flexibility of an organization’s production systems.
The goal is to make the organization more responsive to market demands and better adapt to
changes in the business environment. This may be accomplished through various means, such as
introducing new technologies, revising processes, or changing the organizational structure.

6. Reduce the risk of disruptions to the organization’s production systems.


The leading objective of operations management is to reduce the risk of disruptions to the
organization’s production systems. This includes ensuring that all necessary resources are available
and that processes are running smoothly and efficiently. Operations managers work to identify and
mitigate potential risks before they can cause problems. Doing so helps keep the organization’s
production systems running smoothly and avoid costly downtime.

7. Improve communication and coordination among all parties involved in operating an


organization’s production systems.
The objective of operations management is to Improve communication and coordination among all
parties involved in the operation of an organization’s production systems. This includes managers,
employees, suppliers, customers, and other stakeholders. By improving communication and
coordination among all parties involved in production, operations managers can improve efficiency
and effectiveness throughout the organization.

Scope of Operations Management

It is the process of planning, organizing, directing, and controlling the resources needed to produce
goods and services. The scope of operations management includes all the activities necessary to
plan, design, and manage the production and distribution process.

The eight scopes of operations management are as follows:

1) Facility layout planning: This step involves deciding how best to utilize the space in a factory or
office to optimize workflow.

2) Workforce planning and management: This includes ensuring that there are enough employees
with the right skills to do the work required and managing employee performance.
3) Inventory management: This encompasses everything from raw materials to finished products
and ensuring that inventory levels are maintained at an optimum level.

4) Scheduling: This is creating a production schedule that meets customer demand while
maximizing efficiency.

5) Quality control: Quality control is essential to ensuring that products meet customer expectations
and standards.

6) Transportation and logistics: Operations managers must plan to move goods from suppliers to
customers efficiently.

7) Maintenance: Regular maintenance is necessary to keep equipment and facilities running


smoothly.

8) Project management: Many operations require project management to ensure that they are
completed within time and budget.

Components of Operations Management

Forecasting
Forecasting is a critical component and nature of operations management. It helps organizations
make informed decisions about future production needs and capacity requirements. There are
several vital elements to consider when developing a forecasting system, including:

 The type of product or service being produced


 The underlying demand for the product or service
 The lead time required to produce the product or service
 The amount of variability in the production process
 The level of inventory desired

An effective forecasting system takes all of these factors into account and provides accurate
information that can be used to make sound operational decisions.

Total Quality Management


Total Quality Management is a strategic approach to improving an organization’s competitiveness.
It is a philosophy that emphasizes the need for continuous advancement in all aspects of an
organization’s operations, with the ultimate goal of providing customers with products and services
that meet or exceed their expectations.

The Basic Component of Total Quality Management:


1. Quality Planning
2. Quality Control
3. Quality Assurance
4. Quality Improvement

Just In Time
Just In Time (JIT) is a manufacturing philosophy that arose in the 1970s. Its main goal is to
eliminate waste throughout the production process by producing only what is needed and in the
quantities needed.

This philosophy was born out of necessity as businesses increasingly felt the squeeze of overseas
competition. To survive and thrive, they had to find ways to operate more efficiently and cut costs
wherever possible. JIT became one of the most popular methods for achieving this.

1) Produce only what is needed

2) Produce only what is demanded

3) Do not overproduce or keep excessive inventory on hand

4) Streamline the production process to minimize waste and maximize efficiency.

When properly implemented, JIT can result in significant cost savings, improved quality control,
and customer satisfaction. It can also lead to shorter lead times, increased flexibility, and reduced
inventories.

Inventory Management
It is the process of tracking inventory levels and making decisions about what levels are acceptable.
This includes both raw materials and finished goods. The aim should be to strike a good balance
between having too much inventory (which ties up cash and can lead to obsolescence) and too little
inventory (which can lead to stockouts and lost sales).

Inventory management is a critical component of operations management. It encompasses all the


activities and processes associated with the management of inventory, including but not limited to
procurement, warehousing, transportation, and customer service.

An effective inventory management system must take into account both the physical and financial
aspects of inventory. The physical aspect includes the actual goods or materials that make up the
inventory, while the financial aspect encompasses the costs associated with procuring, storing, and
transporting the inventory.

An effective inventory management system will minimize both the physical and financial risks
associated with excess or obsolete inventory. Excess inventory can tie up valuable resources and
lead to storage costs, while obsolete inventory can result in lost sales and customers.

The components of an effective inventory management system include:

1) A clear understanding of customer demand: This involves forecasting future demand for products
or services and ensuring that there is enough inventory on hand to meet this demand.

2) An efficient procurement process: This ensures that the right products are ordered from suppliers
at the right time and in their required quantities.

3) An effective warehousing strategy: This involves storing inventory in a way that minimizes
damage, loss, or theft while maximizing space utilization.

4) A well-designed transportation network: This ensures that finished goods are delivered to
customers within the stipulated time and in good condition.
II. Historical Evolution and Key Milestone in the Field

The Historical Evolution of Operations

Management Industrial Evolution Operations Management began in the 1770s at England and
spread at the rest of Europe and to the United States during the 19th century. It substituted machine
power for human power wherein the most significant machine used is the steam engine. Because of
this, production became fast and low cost, economies become scale, standard gauging system was
developed, factories grew rapidly, and countless jobs were provided.

Scientific Management
Scientific Management widely changed the management of factories. It was developed by Frederick
Winslow Taylor, the father of scientific management. This management is hugely based on
observation, measurement, analysis and improvement of work methods and economic incentives
wherein different procedures were studied to identify the best method in doing each job. During this
evolution, Henry Ford practically adopted the scientific management principles for Taylor. The
moving assembly line was introduced which hugely affected many industries. The mass production
was also introduced to the automotive industry.

Humans Relations Movement


Human Relations generally deals with the way on how managers interact with their employees, it is
invented to increase the satisfaction of the workers without sacrificing the quality of a service or
product. This originated from the belief that a satisfied employee will do work more efficiently. The
Human Relations Movement attempted to approach the subject of organizational management
psychologically. Elton Mayo’s work on human behavior at The Hawthorne Works of The Western
Electric Company in Chicago (1924-1927) produced many conclusions in respect of human
relations and motivation theory. This movement led the use, invention and application of digital
computer, linear programming, mathematical programming, commercial digital computer and large
scale computations, and the organizational behavior wherein people are studied at work.

Decision Models and Management Science


This period is accompanied by the development of several quantitative techniques. In this period,
F.W. Harris developed a mathematical model for inventory order size in 1915. During this
movement, W.A. Shewart applied statistical inference to product quality and made use of quality
control charts. H.F. Dodge and H.G. Roming applied statistical sampling to quality control wherein
the sampling plans were inspected. L.H.C. Tippott conducted studies that provided the groundwork
for statistical sampling theory in 1935. P.M. Blacker and his companions also involved themselves
by doing operations research applications in World War II. These models were widely used during
the said world war specially in forecasting, inventory management, project management, and other
areas of operations management.

The Influence of Japanese Manufacturers


Japanese Manufacturers played a huge role in the evolution of operations management. They
developed management practices that increased productivity and quality. Because these practices
were seen as effective and is considered as a good approach, companies outside Japan became
interested towards them. Different quality and productivity applications from Japan robotics were
also developed which made arose towards W.E. Deming and J. Juran’s names in the world of
management. These operations of the Japanese Manufacturers were still widely used today and
greatly influenced operations management.
Historical Milestone on Operation Management

Henry Ford's invention of the assembly line in the early twentieth century, which significantly
increased productivity and enabled mass production of automobiles, making them more affordable
to the general public, was a watershed moment in operations management; this marked a significant
shift toward standardized manufacturing processes.

Other Historical Milestone includes:

Division of Labor by Adam Smith

Division of labor is one of the most important concepts in social science, not just for economics but
for the study of societies in general. Many scholars, such as Ibn Kalduhn in the 14th century, or
Emile Durkheim in the 20th, have considered the importance of division of labor for how societies
function. But Adam Smith’s discussion in The Wealth of Nations united two key concepts: division
of labor as a motor for generating prosperity, and market systems based on self-interest as a fuel for
that motor.
Lionel Robbins famously gave a definition of his field: "Economics is the science which studies
human behavior as a relationship between ends and scarce means which have alternative uses."
Although Robbins is rightly seen as one of the foremost free market economists of the early 20th
century, we have been ill-served by this narrow and technical definition.
The reason that division of labor increases wealth, if voluntary exchange is allowed, is what
economists call “increasing returns.” If four people separately produce everything each one needs,
each will be independent but very poor. If the same four people specialize, with one making shoes
and clothing, one growing grain and vegetables, one focusing only on hunting for meat, and one
becoming skilled in making and repairing housing, then the cooperating group will be wealthier by
far than when they were living independently.
Such artisanal specialization was common in the Stone Age, and explains why many of us still have
ancient guild names: Coopers made barrels. Bakers made bread. Smiths worked with iron. Barber,
Brewer, Shoemaker, Skinner, Tailor: the knowledge that allowed a single artisan to have a trade and
make a living is a way of increasing wealth. But it is not yet division of labor, because it is not yet
commerce. Commerce requires (among other things) the division of labor within a specialization.
Since, as Smith pointed out, division of labor is limited by the extent of the market, the greater the
expansion of commerce to new participants the greater the increase in “opulence,” as Smith
charmingly called it, for everyone.
One of Adam Smith’s great contributions was the recognition that the desire to cooperate, in and of
itself, does not ensure prosperity. The institutional form in which cooperation is embedded makes
all the difference. In fact, once cooperation is established, the desire for cooperation as a primary
goal can sometimes be dispensed with. The institutional setting is commerce in a market system; the
new form of cooperation is division of labor.

Interchangeable parts by Eli Whitney

In 1801, Whitney demonstrated to the U.S. Government how muskets could be constructed using
standardized interchangeable parts. After 1801, interchangeable parts helped grow the First
Industrial Revolution in the United States.
Interchangeable parts are components of manufactured goods that are standardized and are easily
replaced with new parts. The concept of interchangeable parts allows for manufactured goods to be
mass-produced rather than individually crafted.
The first example of interchangeable parts was developed for muskets so that soldiers on the
battlefield could easily and quickly repair their muskets. Interchangeable parts were then found in
the cotton gin, which helped clean cotton fibers. Today, interchangeable parts can be found in
appliances and the automotive industry. For example, car parts can be easily replaced with new
parts quickly and without always requiring a great deal of skill or training.
Interchangeable parts were the concept that manufactured goods could be assembled using
standardized parts, which could be replaced in the item as needed with new parts. Before this
concept, manufactured goods were constructed by skilled craftsmen. Items were crafted by hand
and each item was unique, which meant production was slow and if the item broke it could not be
easily repaired.

Gantt Chart by Henry Gantt:


Henry Gantt, an American engineer and social scientist, created the Gantt chart in the 1910s to help
plan, coordinate, and track tasks in a project. The Gantt chart is a bar chart that shows the start and
end dates of tasks, as well as their dependencies and deadlines.
A Gantt chart is a commonly used graphical depiction of a project schedule. It’s a type of bar chart
showing the start and finish dates of a project’s elements, such as resources, planning, and
dependencies.
The Gantt chart is the most widely used chart in project management. These charts are useful in
planning a project and defining the sequence of tasks that require completion. In most instances, the
chart is displayed as a horizontal bar chart.
A Gantt chart helps in scheduling, managing, and monitoring specific tasks and resources in a
project. The chart shows the project timeline, which includes scheduled and completed work over a
period of time. The Gantt chart aids project managers in communicating project status and
completion rate of specific tasks within a project, and helps ensure the project remains on track. By
convention, it is a standard tool that makes communication unified among the engineering and
project management communities.
A Gantt chart is a visual description of a project’s timeline. The chart shows the start and end dates
of a project’s components, such as resources and planning. If you are involved in a project, it is
recommended to use a Gantt chart to help organize the various tasks within the project.
Taylor believed that all workers were motivated by money, so he promoted the idea of "a fair day's
pay for a fair day's work." In other words, if a worker didn't achieve enough in a day, he didn't
deserve to be paid as much as another worker who was highly productive.
With a background in mechanical engineering, Taylor was very interested in efficiency. While
advancing his career at a U.S. steel manufacturer, he designed workplace experiments to determine
optimal performance levels. In one, he experimented with shovel design until he had a design that
would allow workers to shovel for several hours straight. With bricklayers, he experimented with
the various motions required and developed an efficient way to lay bricks. And he applied the
scientific method to study the optimal way to do any type of workplace task. As such, he found that
by calculating the time needed for the various elements of a task, he could develop the "best" way
to complete that task.
These "time and motion" studies also led Taylor to conclude that certain people could work more
efficiently than others. These were the people whom managers should seek to hire where possible.
Therefore, selecting the right people for the job was another important part of workplace efficiency.
Taking what he learned from these workplace experiments, Taylor developed four principles of
scientific management. These principles are also known simply as "Taylorism".

III. The Role of Operations Management in various industries, including manufacturing and
services

Responsibilities in Operations Management


Operations management is a field of business that involves managing the operations of a business to
ensure efficiency in the execution of projects. It means that the individual in charge of the
department will be required to perform various strategic functions. Some of the functions include:

1. Product Design
Product design involves creating a product that will be sold to the end consumer. It involves
generating new ideas or expanding on current ideas in a process that will lead to the production of
new products. The operations manager’s responsibility is to ensure that the products sold to
consumers meet their needs, as well as match current market trends.

Consumers are more interested in the quality of the product more than the quantity, and the
organization should create systems that ensure the products produced meet the needs of the
consumer.

2. Forecasting
Forecasting involving making predictions of events that will occur in the future based on past data.
One of the events that the operations manager is required to predict is the consumer demand for the
company’s products.

The manager relies on past and present data on the uptake of the company’s products to determine
future trends in consumption. The forecasts help the company know the volume of products needed
to meet the market demand.

3. Supply Chain Management


Supply chain management involves managing the production process from raw materials to the
finished product. It controls everything from production, shipping, distribution, to delivery of
products.

The operations manager manages the supply chain process by maintaining control of inventory
management, the production process, distribution, sales, and sourcing of suppliers to supply
required goods at reasonable prices. A properly managed supply chain process will result in an
efficient production process, low overhead costs, and timely delivery of products to consumers.

4.Delivery Management
The operations manager is in charge of delivery management. The manager ensures that the goods
are delivered to the consumer in a timely manner. They must follow up with consumers to ensure
that the goods delivered are what the consumers ordered and that they meet their functionality
needs.

If the customer is unsatisfied with the product or is complaining about certain features of the
product, the operations manager receives the feedback and forwards it to the relevant departments.

Ideal Skills of an Operations Manager

Unlike the marketing or finance departments, where managers are responsible for their departments,
operations management is a cross-department role where the manager assumes an array of
responsibilities across multiple disciplines. To be successful, an operations manager must possess
the following skills:

1. Organizational Abilities
Organizational abilities refer to the ability of the operations manager to focus on different projects
without getting distracted by the many processes. The operations manager should be able to plan,
execute, and monitor each project to the end without losing focus.

If a manager is not organized, uncompleted tasks will pile up, important documents will get lost in
the process, and a majority of the time will be spent finding lost documents that could be easily
accessible had the manager been organized. Good organization skills can increase production
efficiency and help the manager save time.

2. Coordination
An operations manager needs to have good coordination by knowing how to integrate resources,
activities, and time to ensure proper use of the resources toward the achievement of the
organization’s goals. Coordination involves carrying out specific activities simultaneously and
switching between the activities with ease. It also involves dealing with interruptions, obstacles, and
crises, and efficiently going back to the normal routine functions to prevent further interruptions.

3. People Skills
Most of the responsibilities of an operations manager involve dealing with people. This means that
they must know how to relate with the employees, outside stakeholders, and other members of
senior management. An operations manager should know how to manage the fine lines with other
colleagues by knowing how to communicate, listen, and relate to them on professional and personal
levels.

Since workplaces are made up of people from diverse cultures, the operations manager needs to
show tolerance and understanding to other people. Also, the manager should be able to resolve
conflicts and mediate disputes between employees and members of the senior staff.

4. Tech-savvy
In this age of rapidly advancing technologies, an operations manager needs to have an affinity for
technology in order to be in a position to design processes that are both efficient and tech-
compliant. Modern organizations are becoming increasingly tech-dependent in order to gain a
competitive advantage in the market.

This means that most of the processes conducted manually, such as procurement, must transition to
more efficient automated processes. When an operations manager is familiar with the latest
innovations in the tech industry, they can use the innovations to improve internal processes.

IV. Understanding the transformation process: Converting inputs into outputs

A transformation process is any activity or group of activities that takes one or more inputs,
transforms, and adds value to them, and provides outputs for customers or clients. Where the inputs
are raw materials, it is relatively easy to identify the transformation involved, as when milk is
transformed into cheese and butter. Where the inputs are information or people, the nature of the
transformation may be less obvious. For example, a hospital transforms ill patients (the input) into
healthy patients (the output).

Transformation processes include:


changes in the physical characteristics of materials or customers

changes in the location of materials, information, or customers

changes in the ownership of materials or information

storage or accommodation of materials, information, or customers

changes in the purpose or form of information

changes in the physiological or psychological state of customers.

Often all three types of input – materials, information, and customers – are transformed by the same
organization. For example, withdrawing money from a bank account involves information about the
customer's account, materials such as cheques and currency, and the customer. Treating a patient in
hospital involves not only the ‘customer's’ state of health, but also any materials used in treatment
and information about the patient.

One useful way of categorizing different types of transformation is into:

manufacture – the physical creation of products (for example cars)

transport – the movement of materials or customers (for example a taxi service)

supply – change in ownership of goods (for example in retailing)

service – the treatment of customers or the storage of materials (for example hospital wards,
warehouses).

Several different transformations are usually required to produce a good or service. The overall
transformation can be described as the macro-operation, and the more detailed transformations
within this macro-operation as micro operations.

V. The Interplay between Operational and Other Business Functions

The role of operations management impacts on all functional areas of a business organization
including Marketing, Human Resources (HR) and Finance.

In general, the Operations Department depends on other departments in the firm, if it is to run
smoothly. It is because it is concerned with providing the right products in the right quantities, at
the right quality level, to the right customers, in a cost-effective and timely manner.
How is operations management linked with other business functions?

The relationship between operations and the other business functions is fairly easy to understand, so
let’s take a look.

Impact of production on Marketing


Production affects quantity, uniqueness, and quality of products.

Product, price, promotion, and distribution play an important part in the overall Marketing Mix. The
production method used will affect both the quality and the individuality of the product. An
exclusive product means that it can be marketed at a high price due to its uniqueness and high
quality. However, when there are likely to be plenty of substitutes of the product available on the
market, prices will be much more competitive. Promotional strategies are also more impersonal and
aggressive in order to gain market share from rival firms. Marketing will ask questions where to
distribute products. Businesses that rely on high volume sales to gain high profits such as
supermarkets aim to increase the number of distribution channels to ensure maximum sales. The
correct types of packaging to appeal to customers. Process, physical evidence and people also play
an important part in the extended Marketing Mix. Research and Development (R&D) of products
will be done jointly by the operations department and marketing department.

Example 1: Customers of the car brand Lamborghini are invited by a sales manager to meet in
person and discuss personal requirements for their super cars. By contrast, mass produced
products such as Coca-Cola or BigMac are standardized and sold in millions every single day.

Impact of production on Human Resources (HR)


Different production methods require workers to possess different expertise.

The role of operations management has a direct impact on Human Resource (HR) management.
Any change in production methods can either increase or decrease the size of the workforce. Job
production will increase the number of workers required while mass production uses capital-
intensive technologies, so it tends to deskill the workforce. Motivation will also be affected by
aspects of operations management. Whilst flow production suffers from a lack of teamwork and
group dynamics, cell production benefits from using the individual skills of people working within
a team. There are also training implications when it comes to different production methods – both
training and organizing training for staff. Job production techniques require more training whereas
mass production requires minimal instructional training only. When it comes to recruitment, it is
relatively easy to hire workers for mass production whereas attractive remuneration packages may
be needed to entice specialist workers for job production. Crisis management can be highly
disruptive and unsettling for people, so effective contingency plans are needed. The Human
Resources (HR) department will also need to handle any disputes and grievances involving staff.

Example 2: Many multinational companies managed to enter China prior to its membership of the
World Trade Organization (WTO) by setting up labor-intensive operations – manufacturing plants
where the operations could easily be automated.

Impact of production on Finance


Capital-intensive production or labor-intensive production affects the sources and amount of
finance differently.

Different types of products require different production techniques. Questions will be asked which
supplies to use. Capital intensity and lean production require heavy investment in machinery and
equipment. This is expensive although with mass production the fixed investment costs can be
spread over time. Capital-intensive firms are likely to use investment appraisal techniques to assess
whether the risks are worthwhile. They are also likely to need external sources of finance to fund
the investment projects. A contingency fund, which is finance kept for emergency use, may also be
reserved in case of machinery breakdowns or late deliveries from a supplier, which would delay
production. On another hand, labor-intensive production requires a greater proportion of a firm’s
cost to go into remunerating labor with wages, salaries and other financial benefits. Methods of
payment to be used for employees departmental budgeting. Operations management will also
suggest efficient ways of warehousing the produced products.

Production is part of an integrated system of a business, therefore cannot be considered in isolation.


As a consequence of the fact that all business functions depend on one another, operations managers
of large businesses company must work with the other departments to make necessary requests and
valuable recommendations.

References:

https://www.edureka.co/blog/nature-of-operations-management/

https://www.studocu.com/ph/document/de-la-salle-lipa/bachelor-of-science-in-
accountancy/the-historical-evolution-of-operations-management/30525543

https://www.coursera.org/articles/operations-management

Division of Labor Part I


Adam Smith
https://study.com/learn/lesson/eli-whitney-interchangeable-parts-overview-history-
importance.html

https://www.mindtools.com/anx8725/frederick-taylor-and-scientific-management

https://www.investopedia.com/terms/g/gantt-chart.asp

https://corporatefinanceinstitute.com/resources/management/operations-management/

https://www.open.edu/openlearn/money-business/leadership-management/understanding-
operations-management/content-section-3.4

https://www.superbusinessmanager.com/impact-of-operations-management-on-other-
business-functions/#:~:text=The%20role%20of%20operations%20management,cost
%2Deffective%20and%20timely%20manner.

You might also like