Operations Management: Definition, Concepts, and Applications

Introduction

Today's business environment is an extremely complex one, characterized by numerous features, including the growing forces of globalization, which allow entrepreneurs to expand their operations internationally and benefit from global markets as well as global resources — including commodities, capital, technology, and labor. Another important characteristic of the modern business community is the focus placed on customer satisfaction through the delivery of high-quality products and services at competitive prices. Managers develop and implement a wide range of strategic courses of action to ensure they satisfy the customer while simultaneously operating in an efficient and effective manner that maximizes the potential for profit.

The academic community has also focused on supporting economic agents in reaching their established objectives. This endeavor has taken the form of various theoretical concepts that help entrepreneurs better comprehend, adjust to, and respond to environmental threats, as well as maximize their core competencies in a way that allows them to seize opportunities presented by the micro and macro environments. Among these concepts, one could highlight the SWOT (strengths, weaknesses, opportunities, and threats) analysis, the PEST (political, economic, socio-cultural, and technological) analysis, interactive marketing, and operations management. The aim of this paper is to analyze the concept of operations management — one that can address two of the most pressing issues identified above: operational efficiency and profitability on the one hand, and customer satisfaction through the delivery of high-quality products and services on the other.

Defining the Concept of Operations Management

Operations management is often an implicit concept applied by managers without their always being aware of it. Numerous players in the business and academic communities treat operations management as a given and grant it little actual consideration. It is present in the efficient allocation of resources, in the production and delivery of high-quality products and services, and in ensuring efficient communications at all organizational levels. Operations management can be implemented through a series of complex processes or it can simply be based on common-sense judgments. Given this multitude of applications, the specialized literature has often neglected to offer a universal definition of the concept. Still, some sources do provide clearer meanings.

Carter McNamara (2009) offers the most straightforward definition, arguing that "operations management focuses on carefully managing the processes to produce and distribute products and services." He further explains that these processes are developed by large corporations with greater access to resources, and that smaller entities tend to limit themselves to implementing the strategic courses of action in operations management that have proved valid for larger operators.

Richard Stylves (2008) approaches operations management from an entirely different angle — that of natural disasters and calamities. Taking the example of Hurricane Katrina, he argues that better operations management could have saved more lives and led to a less damaging outcome. He contends that operations managers possess certain skills that could enable more efficient disaster relief. In doing so, he recognizes the benefits of operations management not only for the economic agent but also for the public. Translated into business terms, Stylves defines the concept as "the part of the business world that focuses on the 'process' a firm uses to provide a product or service to the consumer. At its most basic, it is the transformation process that takes raw materials, labor, and capital and turns them into final products or services, adding value for the customer. The goal of OM is to produce a product or a service in the most efficient way."

A third perspective is offered by the Department for Business Enterprise and Regulatory Reform (BERR, 2009), which holds that the primary aim of operations management is to ensure continuity. This is presented as an integral part of the business continuity management process, asserting that sustained performance and connected processes ought to be maintained at all organizational levels.

Conclusion

Today's managers are faced with the difficult challenge of internationalized competition and customers with shifting and incremental demands. In order to cope with these changes, organizational leaders implement numerous theoretical concepts, such as operations management. The notion is difficult to define precisely because it is extremely complex and has countless applications at all organizational levels. In its most fundamental form, operations management can be defined as the totality of processes and strategies implemented by organizational leaders to ensure increased operational efficiency, high quality of products and services, efficient delivery systems, adequate resource allocation, and maximized profits.