Operations Management: Production Methods and Sustainability
Operations management involves acquiring the necessary resources needed for production in the most efficient and cost-effective way. It intersects with several key business functions:
- Marketing function: Physical goods are produced based on market research to meet the needs and wants of customers.
- Finance function: Costs of different production methods are analyzed. Funding is needed for all aspects of operations management.
- Human resources function: Production workers need to be hired and trained to work effectively. Supervisors need to be hired. A crisis management team might need to be formed.
Operations management focuses on the management process of creating goods and services:
Inputs (land, labor, capital, enterprise) -> Production Processes (adding value) -> Outputs (output of products)
Triple Bottom Line: Ecological, Social, and Economic Sustainability
- Ecological: Efficient and sensible use of the planet’s scarce resources. Examples include:
- Green technologies: Environmentally friendly innovations.
- Recycling: Reusing waste products like plastic bottles.
- Ecological footprint: Utilizing the internet instead of transportation for communication.
- Conservation and preservation.
- Economic: Requires businesses to be more responsible in their use of resources. Whether economic growth is sustainable. It helps firms to survive, thrive, and contribute to the economic well-being of others via the creation of jobs and wealth.
- Social: Social justice, equality for both economic and human development. Corporate social responsibility.
Production Methods
- Job/Customized Production: The production of a special or customized service meeting the specific requirements of an individual. It is a unique service, and it is the most intensive method of production as it is reliant on skilled workers. It is the most expensive type of production. There is a lot of flexibility since every product is different.
- Batch Production: Identical goods being made in groups or batches rather than in a continuous flow. Undergoing production. Average production costs are lower than those in customized production. It is useful for small businesses that can’t afford to operate in a continuous flow. There is less flexibility.
- Mass/Flow Production: Large-scale production for mass-market goods. Lower prices are charged due to the standardization of output. The workforce can be unskilled or semi-skilled. Marketing support is essential for demand. Costs are low due to economies of scale. Lower profit margins, no flexibility. Very high start-up costs due to machinery. Workers can become demotivated.
- Cellular Manufacturing: Teams working on certain parts of the production line, broken down into units. Workers operate in teams, increasing motivation. More adaptive to changes in the business environment. New ideas due to teamwork. High set-up costs.
Lean Production: Focus on Less Waste and Greater Efficiency
Factors:
- Less Waste: Streamlining operations to reduce all forms of waste and to achieve greater efficiency. Getting things right the first time to use fewer resources. Total quality management, Just-In-Time production.
- Greater Efficiency: Using resources more effectively to generate output, using less capital or labor. Measured by the productivity rate of resources. Can be gained through staff training and development, higher levels of staff motivation, and improved capital.
- Continuous Improvement: Involves all workers committing to improving quality standards.
Location
Access to cheaper, quality resources like land, labor, or raw materials.
- Outsourcing: Non-essential tasks that can be passed on to an external provider, allowing the business to concentrate on core activities.
- Offshoring: Relocating a firm’s business functions and processes overseas.
- Insourcing: The use of a firm’s own resources to fulfill a certain role which would otherwise have been outsourced.
Supply Chain
Process from manufacturing to customer: Manufacturer -> Wholesaler -> Distribution -> Retailer -> Consumers