Business / Operations Management And Ethics

Operations Management And Ethics

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Autor:  anton  08 December 2010
Tags:  Operations,  Management,  Ethics
Words: 807   |   Pages: 4
Views: 413

Operations Management and Ethics

There are many different definitions of operations management. One of these is “the design, operation, and improvement of the systems that create and deliver the firm’s primary products and services” (Chase, Jacobs, & Aquilano, 2006). Another definition is the “management of the conversion process which transforms inputs such as raw material and labor into outputs in the form of finished goods and services” (Davis, Aquilano, & Chase, 1999). In short, this is an area that is focused on managing and improving business operations that convert inputs into outputs. This is very important to an organization because it can improve productivity and the ability to meet customer needs. This is central to building the reputation of the firm and having the ability to face competition.

In the pharmaceutical industry, there are times when an operations manager must make ethical decisions regarding the company’s supply chain during a public crisis. Some of these cases have been the availability of drugs such as Cipro (antibiotic) after the terrorist scare, the sudden need for smallpox vaccine, and the recent pneumococcal vaccine shortages. Drug product shortages can delay and compromise patient care and increase total costs, including those of alternative therapies, delivery devices, and staff training (ASHP Guidelines, 2001). Operations management in this industry typically needs to determine various scenarios and capacity constraints to ensure that their products are manufactured and distributed in a timely manner according to customer demand. In addition, during times of crisis, ethical considerations must be made because there may be people suffering or even dying due to a drug shortage.

Many drug companies manufacture a large quantity of different products often using the same resources, equipment, and facilities. Therefore, operations managers generate production schedules to meet their company’s business needs. These schedules are mainly based on customer demand and profitability of the different products. When drug shortages arise due to a crisis, such as an influenza outbreak, decisions must be made regarding how to manage the supply chain. Often, production on a product must be decreased in order to increase production of another. This is where the operations manager must make decisions of an ethical nature. A shortage of diphtheria and tetanus vaccine occurred when one of the manufacturers, claiming low revenues, discontinued its product (ASHP Guidelines, 2001). Therefore, sometimes operational management must weigh business needs as well as customer needs.

Another cause of drug shortages may be the unavailability of raw materials used in the finished products. This is problematic in situations where multiple manufacturers make a drug product with material available from only one source. Therefore, operations managers must also make decisions about managing the incoming end of the supply chain. Often, the raw materials cannot be stored in large quantities due to lack of storage space and expiration of the products. In addition, budgeting constraints must be considered and this is dependent on forecasts of the amount of final product that will be manufactured. Again, business need have to be weighed carefully with the needs of the consumer.

At my company, we manufactured a product that was called an “orphan drug”. This meant that only a very small population was afflicted with the ailment that required the use of the drug. Obviously this was not a profitable product for our company due to a small number of sales. Our operations manager was faced with the ethical decision of continuing to manufacture the drug even though the business needs dictated that it should be discontinued. Because the drug prevented some horrible effects of a disease, the operations manager made the decision to continue making the drug as long as possible. The company was able to handle the low profits and the consumers of the product continue to benefit from the drug. In addition, the morale of employees at my company increased because they knew they were doing something to help others and may also improve the reputation of the organization.

In conclusion, operations management is an essential part of any organization. However, managing inputs and outputs can be complicated especially when ethical considerations must be made. In the pharmaceutical industry, ethics play a large role due to the nature of the products and how they affect those who use them. When making decisions operations managers must weigh business and consumer needs and ultimately use their experience and knowledge to make the right choice.


American Society of Health-System Pharmacists. (2001). ASHP guidelines on managing drug product shortages. Am J Health-Syst Pharm. 58, 1445-50.

Chase, Jacobs, & Aquilano. (2005). Operations management for a competitive advantage (11th Edition). New York: McGraw-Hill.

Davis, Aquilano, & Chase. (1999). Fundamentals of operations management (3rd Edition). New York: Irwin/McGraw Hill.

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