The Purpose of Operations Management (DP IB Business Management): Revision Note

What is operations management?

• Operations management focuses on designing, controlling and improving the processes used in the production of goods and services

  • It involves overseeing the entire production process, from acquiring raw materials to delivering the final product/service to customers

• The goal of operations management is to ensure that the production process is efficient, cost-effective and meets the desired quality standards

  • It involves making decisions related to production planning, stock management, resource allocation, scheduling and quality control

Operations management tasks

Designing and improving processes

• Operations managers analyse existing processes and find ways to optimise them

  • They may use tools and techniques such as process mapping and lean production to identify inefficiencies and eliminate waste

Capacity planning

• Operations managers determine the production capacity required to meet customer demand

  • They analyse historical data and market forecasts to ensure that the production resources are adequate to fulfil orders in a timely manner

Stock management

• Operations managers are responsible for managing the stock levels of raw materials, work-in-progress and finished goods

  • They aim to minimise costs while ensuring that enough stock is available to meet customer demand and allow the production process to continue without running out of resources

Supply chain management

• Operations managers work closely with suppliers to ensure the timely delivery of raw materials and components

  • They establish relationships with suppliers, negotiate contracts and monitor supplier performance to ensure a reliable supply chain

Quality control

• Operations managers implement quality control measures to ensure that the products/services meet the required quality standards

  • They develop and enforce quality assurance processes, conduct inspections and address any quality issues that arise

Continuous improvement

• Operations managers strive for ongoing improvement in processes, productivity and efficiency

  • They identify opportunities for innovation, implement new technologies or techniques and encourage a culture of continuous improvement (Kaizen) among employees

Scheduling and logistics

• Operations managers develop production schedules and coordinate the flow of materials, equipment and labour to ensure smooth operations

Operations and the production of goods/services

• Operations management does not only focus on the production of tangible goods/services in the secondary sector

  • It is equally applicable in the primary, tertiary and quaternary sectors  

• The input-output model is a simple explanation of the operations process

The input-output model

 Examples of the input-output model in different sectors

Operations and sustainability

• Sustainable operations management involves integrating sustainability practices into all aspects of the operations management process, from sourcing materials to delivering products

• There are three elements to sustainable operations management

Sustainable operations management

• There are a range of ways to improve sustainability in operations management

Examples of sustainable practices

• Green supply chain management

  • Involves choosing environmentally responsible suppliers, reducing waste, and lowering the business’s carbon footprint across the entire supply chain

  • Focuses on sustainable sourcing, ethical labour practices and transparent operations

  • E.g. Patagonia uses sustainable materials like organic cotton and recycled polyester, ensures fair labour practices, and publicly discloses supply chain information

• Energy efficiency

  • Includes adopting energy-saving technologies, optimising equipment, and reducing overall energy consumption

  • Supports long-term sustainability goals and lowers operational costs

  • E.g. Danone is committed to using 100% renewable energy and aims to reduce its environmental impact by 2030, with a target of becoming carbon neutral by 2050

• Waste reduction and recycling

  • Involves managing waste effectively, applying lean manufacturing principles, and designing products with minimal material usage and high recyclability

  • Emphasises the use of eco-friendly, durable materials

  • E.g. Fairphone produces modular smartphones that allow users to easily replace or upgrade parts, extending device lifespan and reducing electronic waste

• Promoting fair labour practices

  • Ensures safe and healthy working environments, with policies that support wellbeing such as flexible schedules, regular breaks, training access and protective equipment

  • Can also include benefits that enhance employee satisfaction and work-life balance

  • E.g. Google offers employees free meals, nap pods, on-site doctors, and pet-friendly offices. It also monitors staff wellbeing and supports hybrid working for greater flexibility