10 Critical Decisions

Henzer 10 Critical Decision Area for OM

10 Critical Decision areas of operation management 

I. Goods and service design. According to Henzer (2004), design of goods and design defines much of the transformation process. The factors of cost, quality and human resources must be made during the stage. Operation management of product and services is also different because due to different characteristic and tangible / intangible feature.

II. Quality. Customer has a very high quality standard nowadays and operation management decision in quality must be clear and strict for its members to understand and comply. It must set a quality, standard and operating procedure to meet customers’ high expectation.

III. Process and capacity design. Manufacturing of physical products may have higher importance on process and capacity design than services operation. Operation management (product) should decide what process it, what type of technology and to what extent, human resources, quality and maintenance that determines its basic cost structure. Services operation decision on this area is much simpler and it can determine by customers who directly involved in the process. For example, customer will ask tailor to design specific fashion clothes. Capacity design issue is critical for services because it will try to reduce waiting time and avoid lost of sales due to insufficient capacity. For manufacturing capacity design is based on firms financial capability, forecast for future and market demand.

IV. Location can be an area for operation management to decide and with globalization of business, operation managers too must think global. For physical goods, location selection can be determined by pools of qualified human resources, technology, raw material, access to market and government policy. For services as it is direct to customers, the location is determined by market accessibility or near to customer as possible.

V. Layout design. Material flow, process selection...