Operations Management Theory: Definition and Modern Examples

Updated December 04, 2022

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Operations management theory is a set of practices companies use to increase efficiency in production. Operations management is concerned with controlling the production process and business operations in the most efficient🐓 manner possible.

People sk⭕ills, creativity, rational analysis, and technological knowledge are all important for success in operations management. Historically, changes in the division of labor and technological advancements have increased the productivity of businesses and manufacturing operations.

Key Takeaways

Operations management theory encompasses the strategies companies employ to increase efficiency in operations and production.
To operate efficiently, firms should use the least amount of resources needed—and strive to meet the customer's requirements to the highest possible standard.
Maximizing resources involves managing the way raw materials and labor are used to create final goods and services.
Modern operations management is comprised of four theories: business process redesign (BPR), six sigma, lean manufacturing, and reconfigurable manufacturing systems.

Understanding Operations Management Theory

The role of operations management entails certain responsibilities, including ensuring that the business operates efficiently. This is accomplished both in terms of using the least amount of resources necessary and by meeting customers' requirements to the highest standard economically viable. These practices involve managing the process by which 澳洲幸运5开奖号码历史查询:raw materials♏, labor, a💞nd energy are converted into goods and services.

History of Management Practices

In 1911, Frederick Winslow Taylor published the book, "The Principles of Scientific Operations Management," which outlined his theory of scientific management—also referred to as "industrial era organization and decision theory." Taylor was a manufacturing manager, mechanical engineer, and later, a management consultant.

Taylor's theory of scientific management is characterized by specific elements: eliminating inefficiency by moving away from outdated methods, paying workers fairly based on performance, training workers correctly, and intimate cooperation between management and staff. Taylor is referred to as "the father of scientific management," and his theory, known as "Taylorism," was popular in manufacturing in the United States in the 1880s and 1890s.

Before Taylor's early work in the field, systematically measuring performance using scientific methods to improve productivity and economic efficiency had not been done before. More than 100 years later, Taylor's ideas are still used in modern organization and decision theory.

Modern Operations Management

Modern operations management revolves around four theories: business process redesign (BPR), reconꦫfigurable manufacturing systems (RMS), Six Sigma, and lean manufactu💜ring.

Business Process Redesign (BPR)

Business process redesign (BPR)—also called business process re-engineering—was formulated in the early 1990s. As a business management strategy, it focuses on analyzing and designing business processes within a company; a business process is a set of logically related tasks performed to achieve a defined business outcome. The goal of BPR is to help companies dramatically restructure the organization by designing their business pr♈ocesses from the ground up.

Like all strategies, there are advantages and disadvantages to BPR. While it can lead to dram♊atic improvements in productivity, cycle times, an✱d quality, it also requires precise planning and a dedicated team to be successful—not to mention a duration of time that can vary from business to business but can take up to years.

Reconfigurable Manufacturing System (RMS)

Reconfigurable manufacturing systems (RMS) are a type of manufacturing and production system that is designed to incorporate accelerated change in structure, hardware💙, and software components. This allows workflow systems toไ adjust rapidly to the capacity to which they can continue efficient production—and also function in response to market or intrinsic system changes. In short, RMS enables a manufacturing system to be easily reconfigured to produce different products or volumes with minimal downtime and cost.

There are many benefits to RMS, including increased flexibility because manufacturing syst꧙ems can quickly adapt to changing market demands and product variations. Products can also be introduced more quickly due to system adaptability. Finally, production is more efficient and there are lower changeover costs because the time required to switch between different products within a family is reduced.

Six Sigma

澳洲幸运5开奖号码历史查询:Six Sigma is a set of quality-control tools that businesses can use to eliminate defects and improve processes to help boost their profits. This is accomplished by using empirical and statistical quality management methods; "six" is a reference to the control limits, which are placed at six 澳洲幸运5开奖号码历史查询:standard deviations from the normal distribution mean. Six Sigma was developed from 1985 to 1987 by Bill Smith, an engineer working at Motorola. in 1993, Motorola registered Six Sigma as a trademark.

澳洲幸运5开奖号码历史查询:Jack Welch, of General Electric, started an initiative to adopt the Six Sigma method in 1995, which increased the visibility of the method. Every Six Sigma project within a company has a defined step sequence and financial targets, such as increasing profits or reducing costs. Tools used within the Six Sigma process include trending charts, pote🧜ntial defect calculations, and other ratios.

Lean Manufacturing

Lean manufacturing is a systematic method for eliminating waste within the manufacturing process. The lean theory identifies waste that is created through overburdening or uneven workloads. This theory sees resource use for any reason other than value creatꩲion for customers as wasteful, and it seeks to eliminate wasteful resource expenditures as much as possible.

What Do Operations Managers Do?

Operations managers are usually involved in developing new business processes. Usually, the primary focus of an operations manager is organization and productivity, and this role requires a specific skill set; operations managers should have technical expertise, organizational ability, motivational prowess, analyti🐟cal aptitude, decision-making proficiency, and the ability to maintain quality stanဣdards. Most importantly, this role requires versatility and innovation.

What Is an Example of Operations Management in Real Life?

As a guest, dining in a restaurant can be a polished, seamless experience. However, this is only the case if the restaurant's management has optimized the kitchen's workflow. This workflow involves daily food preparation, managing food inventory, safety protocols, and maintaining cleanliness. Restaurant management also involves ensuring consistent food quality and optimizing staffing for peak periods. When the operations management of a restaurant is streamlined, customer satisfaction is greater, and there's a more positive work environment for their employees.

What Is Modern Operational Management Theory?

Modern operations management theory seeks to increase efficiency in operations and production. Of key importance is the dictate that companies should use the least amount of resources needed and strive to meet the customer's requirements to the highest possible standard.

The Bottom Line

The goal of operations management is to ensure that a business operates efficiently. This is accomplished both in terms of using the least amount of resources necessary and by meeting customers' requirements to the highest standard economically viable.

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