The primary purpose of any organization is to produce goods and services, making operations a crucial aspect. In order to comprehend the concept of operations, it is necessary to analyze the various functions within an organization and establish their relationships. All organizations consist of major functions such as marketing, accounting & finance, and product/service development, which are supported by additional functions like human resources, purchasing, and engineering support.
Organizational functions consist of interrelated activities that make it difficult to clearly define the boundaries of operation functions. To determine where operation functions begin and end, or in other words, to identify the boundaries of operations, we can define it as comprising all activities that are exclusive to this function but shared with other functions. This definition, known as the narrow definition, separates operations from all other functions, which is unrealistic in modern organizations. On the other hand, the broad definition includes all activities related to the production of goods or services.
The exclusion of marketing, selling, and accounting core activities is a result of defining and distinguishing the boundaries of the operations function within an organization. To understand how operations function, it is important to recognize how goods or services are produced. This production occurs through the transformation of resources from one state to another. Every organization has inputs that undergo a process resulting in an output. This process can be illustrated as a model known as the transformation process model.
Within the transformation process model, inputs are converted into output through a transformation process. Inputs to any organization can be classified as either transformed resources or transforming resources. The transformed resources consist of material, information, and customers. An example of this is the Orlando international airport, which converts airplanes into an output by refueling them. In other words, airplanes serve as transformed resources as they act as inputs to the airport. Ground staff, in this case, are the transforming resources responsible for cleaning and refueling the airplanes. Another example of transformed resources from the case study is the passengers’ itinerary information.
The system data is being turned into boarding passes through the processing of information. The ticketing staff and the facilities at Orlando’s airport are both transforming resources, as they act upon transformed resources and provide additional services for passengers. These services, such as shopping areas and waiting and boarding facilities, directly affect the processing of passengers and their transportation to other destinations. To gain a deeper understanding of Orlando’s operation function, it is necessary to analyze its micro operations. The transformation process used in the operations of Orlando’s international airport is key to its functioning.
Orlando’s international airport consists of multiple units or departments that function as smaller versions of the overall operations. These units handle various inputs such as passengers, baggage, and airplanes, which are transformed within a transformation model. The main objective of Orlando’s international airport is to provide services to passengers, ensuring a comfortable and relaxing travel experience. This comprehensive function is referred to as the macro operation. Within this macro operations function, there are several smaller units that work towards achieving the overall objectives of the operations.
The entities that engage in the loading and unloading of aircraft are called micro operations. For instance, ground staff is a micro operation. Similarly, the check-in counter and maintenance unit are also examples of micro operation units. Macro operations and micro operations operate within a process hierarchy, which outlines the functioning and task performance of these micro operations in order to achieve the overall goal of the macro operations. This hierarchy assists top management in identifying any issues that may impact the quality of operations.
The hierarchical structure allows top management to effectively address and resolve issues within the organization. In essence, operations contribute value to the organization by offering a dedicated function to organize resources. Additionally, it enables operations management and managers to execute plans and uphold rules and responsibilities. At Orlando’s international airport, the operations director plays a crucial role in overseeing and collaborating with different departments to support overall operational effectiveness. Their responsibilities include identifying business requirements and implementing processes to ensure the airport operates smoothly.
In addition to managing resources and making decisions, he is also responsible for planning and testing business processes to ensure success. The success of Orlando’s international airport is attributed to their strict adherence to tested and improved procedures and policies that adapt to changes in the business environment.
Another local organization with a similar approach to Orlando’s international airport, but in a different industry, is the National Bank of Kuwait (NBK). NBK has achieved impressive milestones in the banking industry by meticulously documenting, planning, and testing every aspect of their operations.
NBK believes that successful business comes from good planning and firm operations. To accomplish this, the management takes good care of managing operations processes. In fact, NBK was the first bank in Kuwait to establish a risk department, responsible for planning the bank’s credit policy and diversifying risk between its investment and loans portfolios. By closely examining its operations from a risk perspective, NBK was able to navigate through the global financial crises and continue to deliver strong performance. This emphasizes the importance NBK places on the operations function.
Moreover, NBK’s adherence to central bank policies is illustrated by their minimal violations which is attributed to their strong internal audit unit responsible for scrutinizing transactions to ensure compliance. For instance, a single error in loan contracts leads to banks being fined at least 20,000 KD. Nonetheless, NBK recognized that substantial fines would negatively affect their profits. Consequently, the management implemented a robust operational system to eradicate these violations entirely. Additionally, NBK achieved another notable accomplishment during the Iraqi invasion of Kuwait in 1990.
During the invasion, NBK was able to continue operating from its offshore branch in London thanks to its management crisis management plan and well-documented processes. This demonstrates that NBK’s foundation was not only its strong financial background, but also its effective operations and planning. Without proper governance of its operations, it would have been nearly impossible for NBK to survive during the war. In conclusion, the role of operations is pivotal for the success of any organization, as it requires both financial investment and solid operations.
Operations are crucial for any business; without them, organizations would collapse and suffer. The key to achieving successful operations lies in planning, testing, and implementing processes. Management must consistently analyze any gaps in operations through the study of process hierarchy. Furthermore, investing in operations is necessary to ensure the quality of goods and services and to maximize customer satisfaction. Additionally, strong operations provide the opportunity for business expansion into new territories, including international markets. It is also vital to maintain the functionality of the firm even during times of crises.
