Page 476 - Fundamentals of Management Myths Debunked (2017)_Flat

CHAPTER 15 • Operations Management 475
Why Is Operations Management Important
to Organizations?

You’ve probably never given much thought to how
15-1 Define organizations “produce” the goods and services that operations management
The study and application of the transformation
operations you buy or use. But it’s an important process. Without process
management and it, you wouldn’t have a car to drive or McDonald’s fries
to snack on, or even a hiking trail in a local park to
explain its role. enjoy. Organizations need to have well-thought-out and
well-designed operating systems, organizational control
systems, and quality programs to survive in today’s increasingly competitive global environ-
ment. And it’s the manager’s job to manage those things.

What Is Operations Management?

The term operations management refers to the design, operation, and control of the trans-
formation process that converts such resources as labor and raw materials into goods and
services that are sold to customers. Exhibit 15–1 portrays a simplified overview of the
transformation process of creating value by converting inputs into outputs. The system takes
inputs—people, technology, capital, equipment, materials, and information—and transforms
them through various processes, procedures, and work activities into finished goods and
services. These processes, procedures, and work activities are found throughout the organiza-
tion. For example, department members in marketing, finance, research and development,
human resources, and accounting convert inputs into outputs such as sales, increased market
share, high rates of return on investments, new and innovative products, motivated and com-
mitted employees, and accounting reports. As a manager, you’ll need to be familiar with op-
erations management concepts, regardless of the area in which you’re managing, in order to
achieve your goals more effectively and efficiently.

Why is operations management so important
to organizations and managers?
1. It encompasses processes in services and manufacturing organizations.
2. It’s important in effectively and efficiently managing productivity.
3. It plays a strategic role in an organization’s competitive success.

1 How Do Service and Manufacturing Firms Differ?

With a menu that offers more than 250 items made fresh each day, The Cheesecake Factory
restaurants rely on a finely tuned production system. One food-service consultant says,
“They’ve evolved with this highly complex menu combined with a highly efficient kitchen.” 1

Exhibit 15–1 The Operations System

Inputs Outputs
• People • Goods
• Technology • Services
• Capital Transformation
• Equipment Process
• Materials
• Information