1.4 Relevance of operations management
1.4.1 Across business functional sectors
Components of operations management are applicable to almost every type of enterprise, from manufacturing to service organizations. Businesses that rely on the processes and control delivered by operations management include manufacturers, banks and financial organizations, retailers and distributors, utility companies, schools and universities, health care providers and hospitals, nonprofit organizations, and government agencies.
1.4.2 Global boundaries
In the global economy, operations management has become borderless as it touches on processes that span supply chains around the world. Global sourcing requires collaborative global planning, and the extended supply chain requires global logistics planning and execution. Knowledge of other nations’ laws, customs, and business practices is of growing importance in operations management.
1.4.3 Current issues in operations management
The following issues are among those being addressed by progressive operations management professionals today.
Globalization. Globalization, understood from economic, financial, accounting, human resources, marketing, cultural, and other perspectives, has brought new challenges to operations management as corporations extend their supply chains beyond their national borders and deal with suppliers and customers around the world.
Information technology (IT). IT is changing rapidly and is providing new and better ways to facilitate the planning and control of a corporation’s activities. Continual development in technology is creating tighter connections in the supply chain, fostering collaboration between partners, improving the ability to plan and schedule, and increasing productivity within a corporation and its supply chains.
Time-based competition. The ability to deliver products and services to the market quicker than competitors has become an advantage in markets where low price and high quality have ceased to be market differentiators.
Innovative business models. As market conditions continue to shift and evolve, some corporations are changing their business models to gain competitive advantage. These changes often include modification of the physical or financial flows associated with delivering products and services, often enabled by emerging technologies. Examples of new business models enabled by the rise of the internet include Amazon (selling directly to consumers), eBay (connecting willing buyers directly to willing sellers), and Dell (reducing inventory dynamically in a build-to-order environment). Operations management professionals should understand these changing models and their applicability in various markets.
Sustainability. Sustainability refers to a corporation’s processes, products, and services being aligned in a way that is socially, economically, and environmentally responsible. Operations management can contribute to good corporate practices by controlling the inputs, outputs, and technologies used in the transformation process. (See section 2.3.)
Collaborative work. Outsourcing and elongated supply chains (supply chains with multiple partners over long distances) necessitate greater collaboration between partners. This collaboration is enhanced by technology that connects partners and shares information between them in real time.
Organizational development. Innovation and collaboration with supply chain partners requires corporations to identify and align internal and external organizational processes. By seeking to understand the reasons organizations and individuals resist change, organizational development proactively guides the transformation needed to enhance alignment within the organization and throughout every link of the supply chain.