Paula Definition: Operation Management focuses on all parts of the company's operations. Operation management is responsible for managing the core of...
Paula
Definition: Operation Management focuses on all parts of the company’s operations. Operation management is responsible for managing the core of the business.
Review of Article:
The article I read was Operation Management Encyclopedia of Small Business. This topic relates to the operation management that is describe throughout the chapters in the reading for this week. The article describes in detail about what operation management is and how it applies to business. “The two most obvious functions are to provide the product or service and to sell the product or service.” This tells exactly the main purpose of operation management. Operation management helps to produce products or provide services to other business’s or the public. Operation managers have many duties such as help with quality assurance, management and training for employees. The managers also help to keep up with cost of goods sold, hours worked to make the product for billing. Also they help with overhead cost for the business to be able to run and make a profit. The key issues for operation management is designing the system which means help with product development. Also to make sure there is a big enough facilities and the right equipment to product the products or services. Then there is product design which is helps with the characteristics of the product and the key features of the product. Also there is process design which help with how the product will be produced. This has two primary functions such as technical component and also the scale of the economy component. The facility design helps to determine the location and capacity at which the company produce products. There needs to be a big enough facility to handle the amount of product produce for the demand of the product. Location is also important as well. The company needs to be in a good location. For example, a company that makes snowplows would be in high demand in Alaska than if the company was located in Hawaii. Planning the system helps management to determine how to utilize the resources from the design system. Planning also helps with the timing and long term plans for the business. Managing the system is working with people for participation and operations. People help with the leadership and training other employees. Material management falls under this category as well. Material management is inventory, controls and handling of the products produced. “To understand operations and how they contribute to the success of an organization, it is important to understand the strategic nature of operations, the value-added nature of operations, the impact technology can have on performance, and the globally competitive marketplace.”
Christie
Definition: Performance metrics are various different measurements and calculations that managers use to manage and control operations in a company (Stevenson, 2015, p. 19). Not all managers use the same set of metrics, but there is an underlying core set of metrics that give a good idea of where a company is headed, such as profits, costs, quality, productivity, flexibility, asset strength, inventory usage, scheduling, and forecasting (Stevenson, 2015, p. 19).
Summary: In the Forbes article Nine Enlightening Business-Performance Metrics, Gene Marks lists and defines the purpose for nine (9) specific performance metrics that are often used in the business world. They are not strictly used by Wall Street big businesses; they can be equally useful to the small business community, and it does not require a degree in accounting to be able to calculate these metrics. The nine metrics discussed in this article are: 1) Cash Flow From Operations – “the hard reality of how much cold currency is flowing in and out of a company,” (Marks, 2008). 2) Inventory Turns – or how long material and supplies sit on the shelf unused. This lowers the rate of return on those assets and subjects them to lost revenue due to falling prices (Marks, 2008). 3) Receivables Growth vs. Sales Growth – these need to stay in proportion to each other to ensure working cash is sufficient. 4) Productivity – working smart to win in the business world (Marks, 2008). 5) On-time Deliveries – keeping the trust of our customers remains an important factor in a successful business (Marks, 2008). 6) Employee Retention – treating employees with respect and gratitude will earn their loyalty to the company, and good employees help retain good customers. 7) Backlog – keeping an eye on current business trends to determine what sales will look like in the future. 8) Interest Rate Coverage – Earnings Before Interest and Taxes (EBIT) is a popular calculation used by banks to determine whether a business can service their loan requests (Marks, 2008). 9) Gross Margin By Product Line – looking at profitability measures on different areas within the company to ensure some are not carrying losses regularly (Marks, 2008).
Discussion: While my company managers look at all of the above measurements on a weekly basis, I am also looking at different metrics that pertain mostly to the quality of service in my specific department. I work in the facilities department of an aerospace manufacturing industry. The metrics that we look closely at are more associated with the equipment that runs the factory rather than the profitability. Even though we do not gauge profitability measures, what we do has a direct impact on profitability. If some of our multi-million dollar equipment is not properly maintained and shuts down for a week, the factory also shuts down for that week, unless they can find another plant to offload the backlog of work to, which is a very expensive alternative. We do monthly metric reports to ensure that our equipment is up and functioning at a minimum target of 95% of the time. If any metric falls below that 95% minimum, there are extensive discussions to determine how it happened and how to prevent it in the future. Without good, efficient performance metrics to guide us, we have nothing to improve upon and nothing to work toward. If we are true to what Paul told the church at Colossus, “whatever you do, do it heartily, as though working for God and not man,” (Colossians 3:23), then we would want run the company as efficiently and honestly as humanly possible.
