IMPACT OF OPERATIONS MANAGEMENT ON DECISION MAKING

The Impact of Operations Management on Decision Making

The Impact of Operations Management on Decision Making

Introduction

An operating system utilises resources to convert inputs into outputs in the form of goods or services. Conventionally, operations management is defined as the task of designing, establishing, planning, running, controlling, maintaining and improving such systems. As the output of such systems constitutes both goods and services this establishes operations management as a field of activity somewhat broader than production (or manufacturing) management which solely provides goods or artefacts. However the distinction between goods and services is unclear and the latter category is broad and heterogeneous. It may therefore be worthwhile to have a more detailed definition: An operating system is a combination of resources combined for the purposes of manufacture, transport, supply and service. These four functions are defined as:

(1) Manufacture where the main characteristic is that something is physically created, i.e. the output consists of goods which differ physically in form, content, etc., from those materials input to the system. (A change in form utility of input resources.)

(2) Transport where the main characteristic is that someone or something is moved, i.e. the location of someone or something is changed. (A change in place utility of an input resource.)

(3) Supply where the main characteristic is that the ownership of goods is changed. (A change in possession utility of an input resource.)

(4) Service where the main characteristic is the treatment or accommodation of something or someone. (A change in state utility of an input resource.)

This identifies the principal components of the operating system as physical resources, e.g. materials, machines and labour. It suggests that the main activity of operations managers is the use of such resources to serve the functions(s) of the system, i.e. to satisfy the system's customers, and also to achieve adequate resource utilisation. Thus operations management can be seen as concerned with the design and planning, operation and control of systems for manufacture, transport, supply and service to satisfy customers' needs and achieve acceptable levels of resource utilisation.

Impacts of Operations Management in Decision-Making

The above comments aim to identify operations management as an area worthy of consideration, and also to suggest that some decisions of operations managers are of importance to those with decision-making responsibilities in other functions in the organisation. In this article we shall consider the manner in which these decisions of operations managers are made. We shall consider this operations management decision-making process within the broader business context and, in particular, the relationships with decision-making in other functions and at a policy level in the business. Paradoxically whilst much of what is written about operations management is concerned with a form of decision-making — solving of particular problems — relatively little attention has been given to the wider decision-making process. We define the operations management decision-making process at this level, as the formulation of overall strategies for operations, typically involving inter-related areas of responsibility with operations management, and the taking of decisions in ...