Unit 26: Principles of Operations Management

Unit code A/618/5078

Unit level 5

Credit value 15

Introduction
Operations management is everywhere, in every organisation, in every service
experienced and in every product consumed. Operations management is the
administration of business practices to create the highest level of efficiency possible in
an organisation. It is concerned with converting materials and labour into goods and
services as efficiently as possible to maximise profits.
The aim of this unit is to introduce students to the role of operations in an
organisation, how the nature of operations management has evolved and how it
contributes to sustained competitive advantage. Students will understand the key
concepts of operations management in an organisational and environmental context,
and how this links to supply chain management, products and processes,
organisational efficiency and effectiveness, and the achievement of tactical and
strategic objectives. A variety of operations management techniques and frameworks
will be explored, including continuous improvement, total quality management,
benchmarking and risk analysis.
By the end of this unit, students will have an appreciation of the dimensions of
operations management and its central role for organisations across a wide range of
sectors. Students will also have the knowledge and skills required to progress to
higher levels of study or employment in positions in operations, logistics and supply.

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Learning Outcomes
By the end of this unit a student will be able to:
LO1 Analyse the effectiveness of operations management in contributing to
organisational objectives across a wide range of organisations and sectors
LO2 Apply a range of techniques and analysis frameworks used by operations
managers to support decision-making and address problems
LO3 Apply the concept of continuous quality improvement in an operational context
LO4 Conduct a strategic risk analysis (SRA) on the operations functions of an
organisation.

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Essential Content

LO1 Analyse the effectiveness of operations management in contributing to

organisational objectives across a wide range of organisations and sectors

Operations management in context:

Definition of ‘operations’ and ‘operations management’.
Evolution of operations management from craft to mass production to
mass customisation to agile and lean.
The role and function of operations management in an organisation and across
the value chain, e.g. planning, organising, co-ordinating and controlling
resources.
The strategic, tactical and operational perspectives of operations management
and its contribution to achieving organisational objectives.
Scope of operations management, including relevance to public, private and
not-for-profit sectors.
Career opportunities and roles in operations management, e.g. Operations
Manager, Logistics Manager, Supply Chain Specialist, Operations Analyst.
Skills and competences required:
● soft skills, e.g. logical approach, quality conformance, communication skills
and ethical awareness
● technical skills, e.g. collaborative planning and forecasting, assessing and
prioritising risks, business continuity planning and mitigation, integrating and
improving systems technologies.
Transformational model of the organisation: input-transformation-outputs.
Dimensions of operations processes, e.g. volume, variety, variation and visibility.
External influences on contemporary operations management, including PESTLE
factors, globalisation, sustainability.
Global and ethical sourcing of suppliers and supplies.

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 Design and management of supply chain networks:
Operations and supply chain management interdependencies.
Types of supply chain relationships, including length, breadth, depth.
Types of supply chain networks in manufacturing, services, retail, construction
and public sector supply chains.
The impact of operations management on global sourcing and criteria for
selecting appropriate suppliers on basis of efficiency, effectiveness, networks,
Just-in-Time (JIT) capabilities.
Benefits and risks of deploying technology to drive efficient, effective, sustainable
and profitable operations.
The impact of internet-based technologies and the use of database information
systems to manage expenditures on goods and services.

LO2 Apply a range of techniques and analysis frameworks used by operations

managers to support decision making and address problems

Performance measurement:
Performance objectives of operations management, e.g. quality, speed,
dependability, flexibility and cost.
Setting performance targets.
Defining performance metrics, including financial, customer satisfaction,
employee satisfaction, productivity, response rate.
Balanced Scorecard approach to performance measurement: financial,
customer, internal processes and learning and growth.

Techniques and frameworks:

Control systems and their link to the operational function.
Different types of control systems, to include capacity planning and control,
inventory planning and control and supply chain planning and control.
Building a culture of continuous improvement and total quality improvement.
Business Process Re-engineering (BPR) to radically redesign core business
processes to achieve productivity and quality improvements.
Cost-benefit analysis for justification of operational decisions, systems or
projects.
Valuable, Rare, Inimitable, Organised (VRIO) framework analysis identifying the
source of competitive advantage for the organisation.
Benefits of benchmarking for improving organisational performance, e.g. cost
position, gaining strategic advantage and increase organisational learning.
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 The impact of technology on operations management:
Applications of technologies to drive performance, e.g. cloud computing, mobile
telecommunications, remote working, convergence of technology platforms.
Use of software and cloud-based systems, e.g. Enterprise Resource Planning
systems (ERP), Supply Chain Management (SCM), New Product Development
(NPD) and Customer Relationship Management (CRM).

LO3 Apply the concept of continuous quality improvement in an operational

context

Role of total quality management in operations management:

Quality and continuous improvement as a philosophy (Kaizen) and approach.
Differences between total quality and quality assurance.
Pioneers of total quality management such as Deming (plan-do-check-act) and
Juran e.g. quality planning-quality control-quality improvement
Approaches to total quality management:
● Just-in-Time (JIT), lean
● quality circles
● statistical process control
● process architecture.
Role of information technologies and software in supporting continuous quality
improvement

Continuous quality improvement in practice:

Product quality and process quality improvement in relation to compliance to
requirements, specifications and customer expectations compared to process
efficiency.
Diagnosing quality problems and reducing errors using statistical process
control.
Reasons for variations in product quality process quality.
The Taguchi Loss Function, Poka-yoke and the Six Sigma approach to quality
improvement.
Quality improvement as a cross-organisational activity and not simply as an
independent function.

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LO4 Conduct a strategic risk analysis (SRA) on the operations functions of
an organisation.

Risk analysis and management:

Conducting a risk analysis at the operational, tactical and strategic level.
Exploring risk analysis options, e.g. avoid, reduce, transfer, accept.
The use of risk management standards and benchmarks.
A strategic risk analysis as a systematic and continual process for assessing the
most significant operational risks facing the organisation.

Managing uncertainties and potential threats:

Extending the use of PEST and SWOT to develop contingency plans and
strategies to mitigate negative consequences.
Use of risk identification and mapping to support risk assessment and the
prioritisation of responses.

Stakeholder analysis and expectations:

The relationship between stakeholders and risk, particularly investors, suppliers
and customers.

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Learning Outcomes and Assessment Criteria

Pass Merit Distinction

LO1 Analyse the effectiveness of operations management
in contributing to organisational objectives across a wide
range of organisations and sectors
P1 Analyse the role and M1 Critically analyse the D1 Justify the impact of
effectiveness of operations relationship between effective operations
management across a range effective operations management and the use of
of sectors to meet different management and the operational techniques on
organisational objectives. achievement of tactical and achieving objectives in
strategic business complex and dynamic trading
P2 Discuss the contribution
objectives. environments, making valid
of effective supply chains to
recommendations and
the organisation.
solutions.
LO2 Apply a range of techniques and analysis frameworks
used by operations managers to support decision making
and address problems
P3 Devise solutions to given M2 Evaluate different D2 Critically evaluate, giving
operations management techniques and analysis evidence-based
problems using a range of frameworks used by recommendations, different
techniques and analysis operations managers to techniques and frameworks
frameworks. solve problems and achieve used by operations
high operational managers to solve complex
P4 Appraise the use of
performance. problems and drive
digital technologies for
organisational performance.
effective operational
performance.
LO3 Apply the concept of continuous quality improvement
in an operational context
P5 Evaluate a range of M3 Critique a range of total D3 Produce a continuous
approaches to continuous quality management quality improvement plan,
quality improvement. approaches and techniques underpinned by theoretical
within the continuous concepts, that justifies
P6 Prepare a continuous
improvement plan in order approaches and solutions,
improvement plan based on
to achieve organisational with reference to costs,
operational activities in an
objectives. benefits and sustainable
organisation.
performance.

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272 Specification – Issue 1 – November 2020 © Pearson Education Limited 2020
 Pass Merit Distinction
LO4 Conduct a strategic risk analysis (SRA) on the
operations functions of an organisation.
P7 Discuss the role and M4 Assess a range of D4 Critically evaluate the
importance of SRA for an contingency plans and significance of strategic risk
organisation. strategies available to the analysis for organisations
organisation as it seeks to operating in diverse and
P8 Undertake a SRA for an
manage organisational and complex environments.
organisation using risk
stakeholder risk.
identification and mapping.

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Recommended Resources

Textbooks
COLE, G. A. and KELLY, P. (2020) Management Theory and Practice. 8th Ed.
Andover: Cengage.
JACOBS, F. R. and CHASE, R. B. (2017) Operations and Supply Chain Management.
14th Ed. McGraw-Hill Education.
REID, R. D. and SANDERS, N. R. (2019) Operations Management: An Integrated Approach.
7th Ed. Hoboken NJ: Wiley.
SLACK, N. and BRANDON-JONES, A. (2019) Operations Management. 9th Ed.
Harlow: Pearson.

Websites
www.apics.org Association for Operations Management
(General reference)
www.cips.org Chartered Institute of Procurement
& Supply
(General reference)
www.ismworld.org Institute for Supply Management
www.scdigest.com Supply Chain Digest
Resources/Education
(General reference)

Links
This unit links to the following related units:
Unit 15: Operations Management
Unit 36: Procurement and Supply Chain Management
Unit 44: Business Information Technology Systems

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