Operations Management and Strategy

Operations management and strategy (OMS) is the administration of business practices to create the highest level of efficiency possible within an organization. It is concerned with converting materials and labor into goods and services as efficiently as possible to maximize the profit of an organization. An operations strategy refers to the system an organization implements to achieve its long-term goals and mission. It involves decisions based on multiple factors, including product management, supply chain, inventory, forecasting, scheduling, quality, and facilities planning and management.  For service providers, operations strategy concerns financing, marketing, human resources, and service that matches the company’s goal and mission.

There are three main elements when developing a corporate strategy for operations management:

1) Company Business Model: The first step is to understand the company’s business model. What products or services does the company offer? How does it make money? What are the key drivers of profitability? A clear understanding of the business model will help identify areas where operational efficiency improvements can impact bottom-line performance.

2) Competitive Environment: The second step is to understand the competitive environment in which the company operates. Who are the major competitors? What are their strengths and weaknesses? What is the overall industry structure? Understanding these factors will help identify areas where operational improvements can give the company a competitive advantage.

3) Customer Needs: The third step is to understand customer needs and how they vary by product or service offering. What do customers value most? How much are they willing to pay for quality levels?

 

Topic 1 DQ 1