Management > Explain why managing productivity is important in operation management

Operation management has a strategic role in successful organizational performance as more and more organizations move toward managing their operations from a value chain perspective.

The importance of productivity is clear for all organizations. Service organizations, manufacturing, high tech, or even non-profit charities need to do more with less. Those who ignored it are no longer competitive or possibly no longer in existence. W. Edwards Deming pointed out that most of an organizations productivity is influenced by the process itself; and managers, not workers were the primary source of productivity.

Productivity however is composite of people and operations variables. To improve productivity managers should focus on both. An effective organization maximizes productivity by successfully integrating people into the overall operation system. Operation management plays a strategic role in production. Successful manufacturers recognize the crucial role that operations management plays as part of the overall organizational strategy to establish and maintain global leadership. Operation management is the design, operation, and control of the transformation process that converts such resources as labor and raw materials into goods and services that are sold to customers (Robbins, Decenzo 401).

Inputs can be not only labor and raw material, but also technology, capital, equipment, and information. All these or any of these resources can be taken and transformed into goods and services through various processes, procedures and work activities. Operation management is extremely important to organizations and managers. There are three main reasons. First, it includes processes in all organizations, service as well as manufacturing. Second, it’s crucial in an effective and efficient productivity management, and thirdly it has a strategic role in an organization’s competitive success.

All organizations produce either goods or services through a transformation process; that is every organization has an operating system that creates value by transforming inputs into finished goods and services outputs. Every organization produces something, and this can easily be recognized with a manufacturing firm that produces cars, telephones, computers or any other tangible items. Transformation process is not readily evident in service organizations, because they produce non-physical outputs in the form of services. Today’s most developed countries have gone from the creation and sales of manufactured goods, to the creation and sales of services. Most of the world’s industrialized nations are mainly service economies. Productivity is closely related to the transformation process, and improving productivity is a major goal for every organization.

The formula for productivity is the overall output of goods or services divided by the inputs needed to generate that output. High productivity leads to economic growth, where employees can receive higher wages, and the company’s profit will increase. Increased productivity lowers costs, and makes products more competitive on the national and global market place. Companies that hope to succeed globally are always on the lookout for new ways to improve productivity. Managers need to realize that improving productivity is mainly up to the workers of the organization. It’s the employees themselves who affect productivity, and the company and its managers have to maximize the contribution of the employees in order to get a better return on their investment.

 

 

Reference:

Bavendam Research Incorporated. Managing Productivity. October 12, 2004 http://www.bavendam.com/pdf/specialreportsvol4.pdf

 

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