Last time, we discussed the aspect of operations and stopped with the fact that operations add value. We shall continue from here.
Not only does operations adds value, but it also needs information. Note that no process operates completely independently, decisions have to be made and questions must be asked as to what must be done first before and after. For example, should I start my egg, coffee, juice, or toast first? Should I boil egg or fry it and for how long should I cook it? How well is the process working? Questions such as these require information, and that information must also flow properly to align with the process.
Components of operations
The transformation process usually involves equipment, people with a range of skills, inventories of goods to help smooth out the operation, and energy to make it all happen. The followings are the four components of operations:
- Equipment: This is the machinery needed to make production happen. These are needed resources used or combined together to ensure that production is achieved: mixers, stoves, and cash registers in restaurants; computers and automated teller machines in banks. However, we note that four important features of equipment are capability, capacity, flexibility, and reliability. Capacity refers to what a piece of equipment can do, for example, drill presses are capable of drilling round holes but not square ones. In quality terms, capability refers to a machine’s ability to perform reproducibly. We note that capacity is different from capability. This word has two distinct notions: how much a piece of equipment can hold and the amount of material, number of customers, or quantity of information that can be processed or produced in a given period of time. We shall limit to just capacity and capability for now.
- People: Capability, flexibility, and reliability also apply to people, who bring muscles, brains, and interpersonal skills to operations. Most operations require some labor to operate machines, move materials, or perform operating tasks, but nowadays, we notice that physical labor is increasingly being reduced as task become automated as machines are taking over. These machines operate based on artificial intelligence (AI) technology. So, instead of doing hard physical work, operations employees are increasingly expected to watch dials or monitors, make periodic quality checks, stop the process, and make minor adjustments to machines.
- Energy: Energy is a component of almost any operation and very useful at that. In other cases, however, energy is a major operations factor. Our economy developed around energy sources, as many watercourses were exploited to run mills and factories, as well as for transportation.
- Inventory: Inventory is an input, a component, and a product of most operating systems. It can be defined as anything that is purchased or acquired for transformation or resale, or that assists in the transformation of materials into saleable goods. There are three kinds of inventory: raw materials, work in process, and finished goods: But depending on your perspective, an inventory item can be raw materials, work in process, or finished goods simultaneously. Inventories both cost and save money and organizations have inventory because it is cheaper to have it than not. Just as an inventory item can be raw materials, work in process, or finished goods simultaneously (depending on your perspective), it can also serve more than one function at any given time.
In our next episode of learnings from operations management, we shall look at what is known as operations tasks. Thank you for taking the time to read this article.
Andrew Omeike
#MEMBA 11
