Operations management is just as important in small organizations as it is in large ones. Irrespective of their size, all companies need to produce and deliver their products and services efficiently and effectively (Slack,2015). The field of business policy/strategic management has offered a variety of frameworks and concepts during the last half century, many aimed at “taking business and its management seriously.” The last two decades, in particular, has brought us, the specialists and not only, literature in the fields of strategic management, strategic planning, corporate and business policy and related topics. Strategic management is quite a new way of referring to “fields of business policy and planning” (Slack,2015). However, as a separate field of study, it is still at a fairly young and relatively evolutionary stage. As a result, many definitions of strategy abound, and the terms “strategic planning,” “policy,” and “strategic management” often mean precisely the same thing to different authors (Oladele,2017).
As Figure 1 illustrates, every business is managed through multiple business functions. Organization, policies processes and procedures, multiple frameworks are all related and are under the operational framework. It’s about how leaders will govern the company and the hierarchy of its divisions or management teams. For example, the framework may set out the levels of management, from the CEO to department heads and ordinary managers. Accompanying this might be a chart illustrating the corporate hierarchy. In smaller firms, this section might simply state the corporate structure, such as owner-operator.5
Figure 1 Organizational chart
Operations management (OM) is the business function responsible for managing the process of creation of goods and services. It involves planning, organizing, coordinating, and controlling all the resources needed to produce a company’s goods and services. Involving managing people, equipment, technology, formation, and all the other resources needed in the production of goods and services operations management is the central core function of every company. Marketing is essentially the window to customers.
The framework sets out the way the company does business and promotes a corporate culture and identity. The company policies are outlined by operational framework. These can include guiding principles on behaviour, employment and promotion. It might also contain general guidelines for all employees to follow. The framework does not generally list exact instructions for processes but how to conduct business planning and when to do an audit (Brumley,2017). The framework might have procedures for managing workflow, policies for bidding on contracts and for allocating assets to company divisions. It may also include specific information on procedures for hiring, facilities management and customer relations. Companies might have more than one operational framework. An organization might develop a framework to achieve a particular goal.
For example, in recent years, a private sector set out a sustainability framework that established goals and procedures for fostering growth in developing countries by financing private sector investments. The company developed a framework, with goals for each section of the business (Oladele,2017). An innovations framework may outline policies, procedures and management changes the company will use to achieve innovation and growth.
The marketing function of a pharmaceutical company is responsible for promoting new pharmaceuticals to target customers and bringing customer feedback to the organization. All they have to do after the feedback is to design, produce, and deliver the various pharmaceuticals to hospitals, pharmacies, and other locations where needed. Without operations, there would be no products to sell to customers.
The Business policy of an organization is influenced by various interrelated and interacting, factors. These factors can be classified as internal and external factors. The internal factors are determined by the ones which are directly involved in the firm (Oladele,2017). External factors include all those factors which act from outside the firm and influence the organisation externally.
The determinants include the Business mission, Business objectives, Business resources and the Management values which are all internal to the organisation and play a very important role in the formulation of Business policy.
1. Business Mission provides the company with the meaning for which it exists and operates.
2. Business Objectives All organisations frame organisational objectives and work towards their achievement.
3. The Resources: The size of plants, capital structure, liquidity position, personnel skills and expertise, competitive position, nature of product etc. all help in the formulation of Business policy.
4. Management Values: differ from organisation to organisation. It is an important determinant of Business policy.
These include the forces external to the firm. The external determinants of Business policy are industry structure, economic environment and political environment.
1. Industry Structure: comprises of size of firms, the entry barriers, number of competitors etc.
2. Economic Environment comprises of the demand, supply, price trends, the national income, availability of inputs, the various institutions etc. and, so, it becomes one of the most important determinants of Business policy.
3. Political Environment: The firm has to carry Out its activities in accordance with the government regulations and policies (monetary policy, fiscal policy, credit policy influences the Business policy of the firm).
4. Social Environment: The social beliefs of the managers influence policies. The religious, cultural and ethnic dimensions have to be dealt with while formulation policies of an organisation.
5. Technology:. An organisation has to change with the changes in the environment. It has to remain up to date with respect to technology it uses. Thus, technology also plays an important role in formulation of Business policy.
In order to have a successful business, strategic alternatives are crucial in the development of an organisation. Within an organisation, depending on its size, there are different person who take decisions such as the owner itself, the CEO or other mechanisms (Keegan, 1969).
As an example, a firm is experiencing increased competition of its products. Should it reduce price, improve the quality of the product, use a mix of’ the two, improve the distribution network, improve promotional effort? Is there a set of guidelines which could be followed by the organisation? Alternatives external to the organisation such as mergers, acquisitions and joint ventures may also be considered. Withdrawal from an existing business might be best for the business. The Government could have the most serious opposition may come from in its anxiety to protect workers likely to be rendered unemployed if a firm may consider withdrawal from a business (if the present value of the anticipated stream of earnings from that business is less than its present worth). Providing attractive retrenchment terms to workers or offering alternative jobs to workers in other units are alternatives included (Keegan,1969).
Quality management ensures that an organization, product or service is consistent. It has four main components: quality planning, quality assurance, quality control and quality improvement. Quality management is focused not only on product and service quality, but also on the means to achieve it. Quality management, therefore, uses quality assurance and control of processes as well as products to achieve more consistent quality.
Eg. Quality Management Within a Health Care Organization (Sanders, 2013).
In health care settings, excellence is measured in health outcomes and patient satisfaction. Even in small businesses, such as physician practices and home health care providers, these factors can be tracked and turned into a competitive advantage. A Quality Management System is a set of processes defined and implemented to enable an organization to satisfy the needs of its customers. It is a defined and documented approach that guides all levels of management, all departments of an organization as well as all suppliers of the organization in marching towards a common goal – Understanding Customer needs and requirements and delivering products and services that caters their needs (Sanders,2013).
QMS is a must for all organizations that want to deliver and excel in satisfying the needs of their customers. QMS is not limited to activities performed by a Quality team. QMS is attributed to all departments of an organization and extends to suppliers also. The Quality team enables and supports successful deployment of QMS in an organization. QMS is a tool and the Quality team is a driver that uses the tool for the betterment of the organization. The objective of QMS is to deliver and satisfy customer needs. Therefore, Customer Focus is an integral part of any QMS (Sanders,2013). To work towards this goal, any organization will have a Vision, Mission and Quality objective. This will be the next element of a QMS. To achieve this goal, the organization will devise processes, policies for various departments. Then the organization will allocate resources for the processes to be executed. Next, to ensure that these processes do not have any bottlenecks and resources are utilized effectively, the organization will use Data based analytical approach and continual improvement process. Thus, the above highlighted items are the integral part of an effective QMS.
The benefits of using a QMS: brings a defined approach to achieve the objectives of an organization, sets a standardized requirement for all functions and departments, increases the confidence level of the customers on your product/service, ensures that the objectives of the organization are linked towards the customer needs and thus creates a perfect value chain, increases the effective use of resources, It sets clear objectives for each job role and each team, it enables an organization to understand its pain areas, customer complaints and concerns, and work towards it.
The Role of Manufacturing and Service Operations in the Organization and Supply Chain Operations management plays a critical role in the organization and supply chain. Without OM there would be no products to sell, operations cannot work in isolation from other business functions. Each business function manages unique aspects of the business, and they all must work together. For example, operations must work with marketing to understand the exact wants of a particular group of customers so that it can then design the exact products customers want and create the production processes to efficiently produce these products. Marketing “understand” operations’ capabilities, including the types of products it can produce and the limitations of the production process (Brumley,2017). The company may find itself in a situation where it is producing products the customers don’t want if there’s no communication between marketing and operations. Operations links marketing—with its ties to customers—to sourcing—with links to sources of supply. Operations must understand exactly what customers want and be able to ensure that sourcing can get the materials needed at the right price and at the right time to support product designs or offer alternative material options (Magloff,2017).
Ensuring that OM fits in with the other organizational functions is necessary but not sufficient. The reason is that each company depends on other members of its supply chain to be able to deliver the right products to its customers in a timely and cost-effective manner. A company depends on its suppliers for the delivery of raw materials and components in time to meet production needs. If deliveries of these materials are late, or are of poor quality, production will be delayed, regardless of how efficient a company’s operations process is. A company depends on its distributors and retailers for the delivery of the product to the final customer. Sales will suffer if products are not delivered on time, are damaged in the transportation process, or are poorly displayed at the retail location (Oladele,2017). Also, products will have higher prices if the operations function of other members of the supply chain is not managed properly, excess costs will result, which will be passed down to other members of the supply chain in the form. Companies that comprise a supply chain, which is operating in a seamless and efficient manner, need to coordinate and link their operations functions.