Lesson 5.docx - Lesson 5 BUSN 100 | WEEK 5 Operations Management When a business establishes its operations it must determine how it will be structured

Lesson 5.docx - Lesson 5 BUSN 100 | WEEK 5 Operations...

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Lesson 5 B U S N 1 0 0 | W E E K 5 Operations Management When a business establishes its operations, it must determine how it will be structured to deliver the goods and/or services that it will sell in the marketplace. This requires determining which production system—manufacturing or service—is most appropriate to achieve the business’ goals and objectives. Once this system is determined, a business must practice operations management to ensure that its resources are used efficiently and effectively in a way that allows it to maximize profits. This lesson will discuss production systems and the importance of operations management. This lesson also will look at three areas—price, quality, and time—where businesses must have superior performance if they wish to be competitive. Operations management is critical to ensure excellence in each of these areas. One way to do this is with Total Quality Management (TQM). This lesson will include an overview of TQM. To enhance operations management and enable TQM, leaders and managers of businesses should empower their employees. In conclusion, this lesson will discuss employee empowerment and how it can benefit businesses. LEARNING OBJECTIVES: Explain the internal structures of organizations. Creating Goods and Services Begins with a Production System Business begins with production. Production can be defined as “the creation of finished goods and services using the factors of production: land, labor, capital, entrepreneurship, and knowledge” (Nickels, McHugh, and McHugh 2013, 237). Historically, production referred to manufacturing and focused on the production of goods, not services. But over the years, the United States economy has evolved from one that focuses on manufacturing to one that is dominated by and focuses on providing services (Nickels, McHugh, and McHugh 2013, 237). A production system refers to the techniques and procedures that a business uses to produce goods and or services. Production systems can be one of two types—manufacturing or service. Manufacturing systems are used for businesses that primarily produce goods. Goods are tangible items that have physical properties such as automobiles, computers, and groceries. Service systems are used for businesses that primarily produce services. Services are tasks or work that businesses perform for customers. These
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tasks can be performed by either people or machines and include work such as legal assistance provided by an attorney, haircuts provided by beauticians, and lawn mowing provided by landscaping professionals. A production system is a transformation process that involves inputs, production control, and outputs. An input can be thought of as an item that is external to the transformation process and is transformed by the production system, typically in combination with one or more other items, to become an output (Business Dictionary). Inputs are the factors of production, such as capital, land, materials, entrepreneurship, and information, which are used to produce goods and services.
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