5.1 Introduction to operations management
Turning inputs into the goods and services customers want, efficiently and sustainably.
Operations management is the planning, organizing and control of the processes that turn inputs (materials, labour, energy, information) into outputs (goods and services). It applies to factories, but just as much to hospitals, airlines, banks and online shops.
What operations managers aim for
- Efficiency: producing at the lowest possible cost per unit, with little waste.
- Quality: meeting customer expectations consistently.
- Speed and dependability: delivering on time, every time.
- Flexibility: adapting output and products to changing demand.
- Sustainability: reducing environmental damage and using resources responsibly.
Links with other functions
Operations works closely with every other department. Marketing forecasts demand, so operations knows how much to produce. Finance sets budgets for equipment and materials. HR recruits and trains the workforce operations needs. A change in one area affects the others. A promotion that doubles demand is wasted if operations cannot keep up.
Operations and sustainability
Operations decisions affect the planet and society: energy use, waste, emissions, water, and the working conditions of suppliers. Sustainable operations look at the full life cycle of a product, from raw materials to disposal.
Circular business models
Most products follow a linear path: raw materials are taken, made into a product, used, and thrown away. A circular economy keeps products and materials in use for as long as possible, then brings them back to make new products, so there is no waste.
A circular business model is a way for a business to earn money from keeping materials in that loop, by using recycled inputs, renting instead of selling, sharing, repairing, or recovering materials. It cuts costs and waste, and appeals to customers who care about the environment. But it can need new skills, take back systems and investment, and some customers still prefer to own new products.
- Measuring productivity only by output in services. In teaching or health care, quality of service matters as much as quantity.
- Writing about sustainability as only environmental. Operations can also be judged on economic and social sustainability.
Practice questions
New IB style questions every time. You won't get the same one twice until you've done them all at this level.
All companies, people, products, places and figures in these questions are fictional. Any resemblance to real businesses or people is a coincidence and is not intended.