OPERATIONS MANAGEMENT
Definition Operational terms
Being a business start-up is a great step forward. But learning more about the business you’re in is even better.
Imagine you meet a potential investor face-to-face, say Tony Elumelu of UBA Group who is an avid investor and is considering investing in you, and he asks you to let him know the impact the LSETF funds has had on your throughput and all you can stammer is ‘Errr…’
Exactly. That’s why you need this list of operational terms and their easy definitions.
WHAT IS OPERATIONS MANAGEMENT?
Operations management is concerned with managing the entire production system of producing a good or service. It is the process that converts inputs (in the forms of raw materials, labour, and energy) into outputs (in the form of goods and/or services).
ASSETS
The tangible and intangible goods, intellectual property, and goodwill that are listed under the asset column in the balance sheet for a company. Any beneficial item owned by a company.
BOTTLENECK
A bottleneck is a point of congestion in a production system that occurs when workloads arrive too quickly for the production process to handle. The term is used to describe points of congestion in everything from computer networks to a factory assembly line.
CAPACITY
For a process or activity, the maximum THROUGHPUT that can be sustained.
CAPITAL EXPENDITURES (CAPEX. CAPITAL)
The cash cost of acquiring capital equipment or goods. Capital expenditures result in depreciation that is the cost that appears on the P&L statement.
CASH FLOW
The beginning and ending net cash as a result of cash that has flowed through an operation over a given period of time.
CUSTOMER RELATIONSHIP MANAGEMENT (CRM)
CRM software manages a number of customer-facing activities including call centres, sales force automation, and direct selling. A good CRM system provide the following benefits:
(a) Collects timely and complete information on customers through call centres, e-mail, point-of-sale operations, and direct contact with the salesforce.
(b) Reduces the transaction cost for buying products and services.
(c) Provides immediate access to order status.
(d) Provides support that will reduce the costs of using products and services.
DEBT
Monies owed by a company
ECONOMIES OF SCALE
A concept from economics where a reduction in cost per unit results from increased production, realized through operational efficiencies. Economies of scale can be accomplished because as production increases, the cost of producing each additional unit falls.
FORECASTING
The process of predicting future events, including product demand
JUST-IN-TIME
A philosophy designed to achieve high-volume production through elimination of waste and continuous improvement
KAIZEN (改善)
This is the Japanese word for "continual improvement ". In business, kaizen refers to activities that continuously improve all functions of processes of production, i.e. continued improvement of the end to end delivery process of a good or service.
LEAD TIME
Time that is required to fill an order or meet customer demand.
LEAN SYSTEMS
A process that takes a total system approach to creating efficient operations through the elimination of waste
PROCESSING TIME
The period during which one or more of your business raw materials are transformed into a finished product by a manufacturing procedure. Every business seeks to minimize its process time as much as possible.
PRODUCT DESIGN
The process of deciding on the unique and specific features of a product.
PROJECT MANAGEMENT
This is the process of organizing and managing resources that are necessary to complete a project. Project managers must ensure that the project is delivered within the existing limitations. These limitations can be time, cost, people, risk, and many more.
QUALITY MANAGEMENT
The process used to ensure the quality of a product, including measuring quality and identifying quality problems
REENGINEERING
The process of redesigning a company’s processes to increase efficiency, improve quality, and reduce costs. In many companies things are done in a certain way that has been passed down over the years. Operations management is a key player in a company’s reengineering efforts.
SCHEDULING
The process of deciding on the timing and use of resources within an operation; it addresses questions such as who will work on what work schedule and in what sequence jobs will be processed.
THROUGHPUT
The quantity of a product or service a company can produce and deliver to a client in a specific period of time. A firm’s production capacity and supply chain efficiency strongly determine its throughput.
VALUE ADDED
A term used to describe the net increase created during the transformation of inputs into outputs. This seeks to create value added in the transformation process.
VENDOR
A party in the supply chain that makes goods and services available to companies or consumers. It can be used to describe the person or organisation that is paid for the goods that are provided to the customers. E.g. A Gala vendor is one that usually buys in retail or wholesale from the Gala factory.
A party in the supply chain that makes goods and services available to companies or consumers. It can be used to describe the person or organisation that is paid for the goods that are provided to the customers. E.g. A Gala vendor is one that usually buys in retail or wholesale from the Gala factory.
