Operations Management And The Importance Of Interdepartmental Communication

Introduction

Operations management is the department responsible for overseeing the transformation process through which company resources (e.g. land, labor, capital, and/or customers) are converted into goods and services. It is the operation manager's responsibility to ensure that products being manufactured meet specifications of quality and design, that they are produced according to schedule, and that this done at minimum cost to the company. The magnitude of this task requires that the operations manager stay in constant communication with numerous other functional departments of an organization. There are six critical phases of production for which operations management is responsible: (1) service or product design, (2) product quality and process planning, (4) capacity planning and supply chain management, (5) material requirements and inventory planning, (6) facility location planning and (7) facility layout and job design. The nature of an operation manager's responsibilities will vary by organization and depends on the type of product or service being offered. However, regardless of the company, because operations managers are concerned with such a variety of tasks, sustaining clear lines of communication within the organization is critical. In order to maintain and improve production quality and efficiency the operations manager must stay in continual dialogue with the finance, marketing, human resources, and research and design departments.

Service and Product Design

In service or product design two questions will be addressed: (1) what service or product should an organization be offering and (2) what will be the design for this service or product. The first question requires communication with the marketing department, while the second questions is dependent upon the research and design (R&D) and finance departments. The operations manager must first learn from marketing what new products are being developed and what the demand for new products will be. New ideas for products or service are most frequently created in the marketing department, which is the unit most interested in discovering and meeting consumer needs. After a demand and new product idea have been established, the operations manager must communicate this to R&D, which will work to create a physical product. The R&D team determines the materials used and the product's structural configuration. However, because an engineer may be more interested in creating a technically advanced product than a producible one, this process must be monitored. In the standardization and simplification process, therefore, both operations management and the finance department will put pressure on the R&D team to modify a design so as to lower production costs and decrease the chances of product failure. This is achieved often through modular design, which simplifies the production process by using fewer parts, and making those parts easily detachable. Product design has the ultimate goal of creating a blueprint for a product that has low manufacturing costs and high quality. Having too many parts not only increases production costs, but also the chances for product failure over a short period of time. If the operations manager does not maintain a fluid communication system with and between his the R&D and finance departments the company might start out with a new product that puts it over budget and provides a low return on investment.

Product Quality and Process Planning

In large companies production quality is generally or should be controlled by another department outside of operations management. When this is the case, it is still an operation manager's responsibility to ensure that quality standards are being met and improved upon. Quality can refer to two areas: product and process. The product quality is established during the product's configuration in R&D. To ensure product quality the operations manager must maintain dialogue with R&D to ensure that the product is being made with appropriate and safe materials, that there are not an unnecessary number of parts, and that the product has been tested satisfactorily. At this stage the company must decide how they define quality, or rather what their quality standards will be.

The level of quality is greatly dependent upon the marketing segment being targeted. For example, a segment that is very price sensitive is not likely to make purchases with a high concern for quality. Therefore, the company may choose to manufacture a product with less expensive materials. However, it is generally more profitable to offer higher-quality products since they can justifiably be sold at higher prices. Total quality management (TQM) is a system that attempts to achieve zero-defects in its products from production design all the way through the production process. The idea behind TQM is that the company will save more time and money (both critical resources) by creating a high quality product and not having to concern themselves with repair, warranties, returned products, discounts, recalls, and other poor quality induced costs. Prevention costs--such as quality inspections, higher cost materials, effective machinery and production processes--are generally less than the accumulated costs to the company resulting from a poor quality product.

Quality management, therefore, begins with product design and continues into production planning. After determining what the quality standards for the company are, the operations manager must address two essential questions regarding production or process planning: (1) what process will be used to manufacture these products and (2) what labor, machinery, and/or technology will be needed. Process planning determines the system of production and the sequence of processes that will result in the manufacture of the product.

In order to answer the above questions, the operations manager must first perform the make-or-buy analysis. The operations manager together with the finance department determines if it is more costly to buy outside the company or produce needed materials from within. The process selected--make or buy--also influence the human resources department since it must determine whether the employees needed for the selected production process are available, what training they might require, and/or if new employees should to be hired.

There are numerous types of skills required to complete the production process. These required skills directly influence the employee mix. The most common types of transformation processes involved in production are chemical (plastics, metals, soaps), physical (metal shops, woodworking, plastic modeling), assembly (welding, stapling, joining), technical (computer-integrated