What Is Operations Management Business Essay

What is operations direction?

Operations direction is fundamentally managing/overseeing all the procedures involved in production, right from the production itself, to the distribution and sale of the merchandises. Operations direction hence frequently constitutes analysing the assorted procedures and operations of the organisation to rate and assist invariably better their efficiency and effectivity ( Andrew, 26 ) .

The operations direction squad is besides tasked with increasing public presentation, bring oning and keeping optimum production degrees and cut downing all operational costs at all degrees, with the ultimate end being to increase the company s net income borders while at the same clip keeping high quality criterions. Although operations direction ( OM ) largely deals with the operations of the company, it besides focuses on the demands of the end-consumer for without them, operations direction is rendered pointless.

Dell Computer Corporation utilizes a really effectual theoretical account of operations direction. The nucleus resource of any operations direction is the human resource. With this cognition, the company puts particular accent on the choice of the operations direction staff. The company ensures that enlisting of such staff is unfastened and just, engaging merely the best campaigners who show the greatest potency and a broad assortment of relevant accomplishments ( William, 579 ) .

The company besides encourages and wagess excellence in public presentation and promotes innovativeness, creativeness and squad work among the staff.

With the coming of engineering, it is besides easier to pull off and supervise alterations and advancement in the whole production procedure in real-time. This translates to a faster Turn-Around-Time in minutess and an ability to do determinations faster therefore salvaging both clip and resources. Dell Computer Corporation is at the head of the technological revolution puting it in a good tactical place to to the full work these benefits ( Alison, 46 ) .

Sing that the operations direction squad trades with about all degrees of the production procedure, the operations directors truly have their work cut out for them. In enrolling operation directors, Dell Computer Corporation non merely seeks out campaigners with advanced operation accomplishments, but besides interpersonal accomplishments, leading accomplishments, every bit good as a general cognition of assorted functional countries within the company. This is because they in the class of put to deathing their undertakings, they should besides demo a singular ability to pass on with other staff, promote squad work, be able to actuate others and besides work with multidisciplinary squads.

Such multidisciplinary countries may include: –

a ) Procedure design and invention

This mainly trades with sketching the production procedure from obtaining the natural stuffs, planing the merchandise and doing the finished merchandise.

B ) Distribution ironss

This involves transporting the finished merchandises from the fabrication works to the terminal point-of-sale, whether to mediators or to the terminal consumer.

degree Celsius ) Selling

This sector in the production procedure merely deals with doing gross revenues. They are tasked with puting monetary values for assorted markets and measuring the profitableness of the merchandises by measuring the cost of production versus the monetary value at which the merchandise is presented to the market.

The selling squad is besides responsible for constructing the trade name name through advertizements and promotional offers.

vitamin D ) Finance

In every concern, the nucleus activity is doing minutess. These minutess are handled by the finance section. Straight from the capital to production costs and eventually to income generated by the concern, all these minutess need to be recorded, managed and invariably monitored to find the fiscal wellness of the company. Inventories of assets and liabilities are made and managed by the finance squad.

vitamin E ) Service operations

This deals with services utilized within the day-to-day operations of the company. Servicess such as merchandise public presentation rating, packaging and bringing among others are handled by the service operations squad.

degree Fahrenheit ) Customer service

Production companies need to acquire feedback from the clients and besides supply client attention services for trouble-shooting and other intents. This improves client dealingss and if the client attention service is efficient plenty, it goes a long manner in making a reputable trade name name. The client feels sufficiently catered for and that is one manner of making and keeping trueness in the clients.

In general, the effectivity of operations direction can be graded by how productive the company is. Operations directors calculate this by acquiring the ratio of end products to inputs:

Productivity ratio: End products

Input signals

For Dell Computer Corporation, outputs comprise of both computing machines and computing machine parts. The inputs include capital, natural stuffs, machinery/equipment, human resource ( labour ) , and other assets.

Basically, productiveness = Output or Output or Output or Output

Labor Capital Materials Energy

This equates to the undermentioned illustrations that show Dell s productiveness figures in income, outgo, gross net incomes and market worth.

Last 12 months 5 Year Growth

Gross saless 60.7 B 1.5 %

Income 2.0 B -13.8 %

Fiscal Highlights


Net income Margin ( ttm ) : 2.68 %

Operating Margin ( ttm ) : 4.86 %

Management Effectiveness

Tax return on Assetss ( ttm ) : 5.30 %

Tax return on Equity ( ttm ) : 28.87 %

Income Statement

Gross ( ttm ) : 58.20B

Gross Per Share ( ttm ) : 29.76

Quarterly Revenue Growth ( yoy ) : 21.70 %

Gross Profit ( ttm ) 9.26B

EBITDA ( ttm ) 3.79B

Net Income Avl to Common ( ttm ) : 1.56B

Diluted EPS ( ttm ) 0.79

Quarterly Net incomes Growth ( yoy ) : 15.50 %

Principles of Operations Management

The kernel of any concern venture is to provide/produce goods and or services for sale. To accomplish that, the direction of any such concern must foremost be in touch with the demands of the client and be able to run into the demand. Dell Computer Corporation identifies the sort of merchandise needed by a peculiar client or group of clients and strives to supply an about customized merchandise for that peculiar market. The first rule applied here is cognizing which market needs what merchandise and the location of that market. This is achieved by making a market research or study where the clients are presented with a forum on which they can aerate their demands or what they would anticipate in a merchandise and the characteristics most relevant to them.

Customers are besides provided with an chance to give feedback on merchandises they have purchased and they besides receive free client support services as an added benefit. Using this information, the company is in a better place to understand and provide for the clients demands and outlooks. In add-on, frequent clients are offered low monetary values and other promotional offers to make trueness and to widen the client base. This is non merely a good scheme to avoid losing clients to the rivals, but it creates a sense of belonging in the client. Dell Computer Corporation besides sends updates to willing clients on new merchandises even before they hit the market.

There are critical factors to see even after a concern has picked up and is apparently running swimmingly with an inevitable jutting advancement in gross revenues and growing. One of these is quality control. Keeping the quality of merchandises that are being presented to the client is critical as this non merely builds a good repute in the market, but besides means that your trade name name remains stainless. Once a repute goes down the drain, the procedure of rebranding or recovering the market trust will be an acclivitous undertaking non to advert really dearly-won.

Although quality control cheques and maintains high criterions of production and quality goods/services, it besides comes in ready to hand when extinguishing redundancies in the production line.

In every market, there are bound to be several investors. Even in a new market, competition sprouts at the first mark of success. It is the inevitableness of supply and demand. Dell Computer Corporation operates in a market in which competition is strife. Therefore, the company chose non to disregard the competition but acquire to cognize what sort of competition other houses pose and so do strategic determinations that will assist the company prosecute in healthy competition in the market cognizing the competition helps the company assess both its merchandises and others deluging the market, with an purpose on bettering the quality of the merchandise, better run intoing the demands of the market, and reexamining the cost of the merchandises in order to remain competitory and at the same clip low-cost ( Chris, 116 ) .

The staff ( human resource ) of any company constitutes the bosom of the company. All factors constant, the staff find the public presentation of a company. Dell Computer Corporation has made a singular investing in human resources. This has been achieved, as aforementioned, through acquisition of extremely qualified and extremely motivated forces. In add-on, Dell Computer Corporation ensures wellness, safety and security steps are in topographic point and effectual for its staff. The company besides continually upgrades its staff by easing their retraining and cross-training through seminars, workshops and company-sponsored classs.

In a command to acquire the most out of the available resources, the company sets out to often execute service and care on the machinery. This increases the lifetime of the equipment while cut downing opportunities of dislocations. What this means is that the company will salvage on new equipment as the bing one will last thirster, and besides salvage on harm control or fixs since few of those will be experienced. Furthermore, during acquisition of new equipment, the company targets low-priced equipment that is nomadic or easy to travel and upgradeable in the hereafter. Compatibility is of import in doing certain that the equipment can be used with either bing machinery, or new extra equipment.

The design and organisation of any company is besides a cardinal rule of operations direction. Dell Computer Corporation disseminates and delegates assorted resources into several waies in the distribution channels with the purpose of concentrating on a specific merchandise or service, or even a peculiar type of client. The company besides strives to place the best provider for its demands and get high quality natural stuffs at the best monetary value. This is geared to increasing net income borders. To cipher this, the break-even analysis can be applied. This analysis helps the company calculate and find the point at which the gross generated by the merchandise and the entire cost are equal. In this instance, it can besides be utilized by the company to find when the company starts doing net income on the equipment.

Break-even demand = cost of procedure or equipment

Price per unit cost per unit


Entire fixed costs of procedure of equipment

Unit monetary value to client Variable costs per unit

Supporting Dell Data

Price/sales ( ttm ) : 0.45

Price/Book ( mrq ) 4.28

Market Cap ( intraday ) 25.86B

Enterprise Value ( Nov 30 2010 ) 19.36B

Draging P/E ( ttm, intraday ) 16.81

Forward P/E ( fye Jan 29, 2012 ) 8.93

PEG Ratio ( 5yr expected ) 1.35

Enterprise Value/Revenue ( ttm ) 0.33

Enterprise Value/EBITDA ( ttm ) 5.11

Cash Flow Statement

Operating Cash Flow ( ttm ) : 3.64B

Levered Free Cash Flow ( ttm ) : 2.35B

The nucleus operation in any fabrication works is to treat natural stuffs to stop up with a finished merchandise ready for the market. To procure uniformity in the merchandises, the treating itself needs to be nothingness of fluctuations and mistakes. Therefore, the company ensures the uniformity of the production procedure. The clip taken from acquisition of natural materials/supplies through the production procedure to distribution and eventually bringing of the merchandises ( wait clip ) should be well reduced. The distance between the fabrication works and the providers, fabrication works and the distributers, distributers and the retail installations, and between the retail installations and the clients should besides be every bit short as possible to cut down conveyances costs and salvage clip.

Every production procedure is susceptible to jobs. It is critical that the company designs and implements a suited job work outing theoretical account. The first measure to job resolution is placing a job when it occurs. For this ground, Dell Computer Corporation collects and records informations throughout the production procedure analysing the quality of the terminal merchandises, the processing informations and any defects to the merchandises that are detected. With this information, the company is able to take disciplinary steps to the production line by placing the causes of such jobs and implementing solutions.

Problems and failings in the current operations direction system

As discussed earlier, Dell Computer Corporation engages in informations aggregation on the public presentation of its merchandises and besides provides both client support and a forum for aerating remarks and new thoughts to further better their merchandise. In such a scenario, the informations collected can be, and largely is, overpowering. What starts out as a great channel to obtain critical information and feedback becomes a liability by blowing resources. Sifting through all that informations and screening the relevant from the irrelevant can be both clip consuming and needs a batch of work force ( Schneider, 109 ) .

This has led to the company seeking a more efficient manner to roll up and screen the information.

During the recent planetary recession, many concerns sank. With the tough economic times, there were merely non as many clients to prolong their concerns. Merchandises piled up in shops and warehouses and shortly the cost of running these concerns far exceeded the sum of gross revenues leave entirely gross net incomes they were doing. Dell Computer Corporation was non spared either. All concerns felt the crunch. During this period, gross revenues went down by a considerable per centum and the company was all of a sudden non acquiring as many orders as projected. The company was in the class of several enlargement undertakings which needed, and were utilizing, a batch of resources. The company was bring forthing more than what the market was able/willing to take on. And although the fiscal crisis is easy deteriorating, the company has had a excess of merchandises that were meant for sale in the market 2 old ages ago. But with the new production line of improved merchandises, that means these excess merchandises are about running disused in today s market.

In an organisation every bit immense as Dell Computer Corporation, there are a myriad of operations traveling on at the same clip in assorted locations, non to advert the large figure of staff/personnel. In such a scene, organizing all the activities that happen within and without each works, installation or subdivision nowadayss banging challenges. The work flow is dependent on the smooth operation and put to deathing specific undertakings in tandem. Therefore, operations directors are faced with a challenge in managing and supervising all the operations of the company and supervising different sections and the functions they play in the production procedure. There is a existent hazard of losing control of some critical operations or go forthing others unattended to. Furthermore, garnering such information on what precisely is go oning at what location in existent clip presents a challenge.


Anticipation in the concern universe is a invaluable plus. A concern endeavor should ever seek to foretell market tendencies and forecast the possibilities in the hereafter utilizing relevant informations. The component of surprise is disadvantageous in concern. Just before the planetary fiscal crisis, Dell Computer Corporation ought to hold made accurate projections on the at hand crisis and planned suitably. The company had sought to cut down the delay clip by mass bring forthing a merchandise that has turned out to be running disused merely 2 old ages down the line. In the engineering industry, merchandises are more like spoilables because of the high rate of technological promotion.

As operations directors oversee and coordinate between assorted sections in the organisation, they should hold mobility. Normally, mobility comes at the monetary value of losing propinquity to the office or some cardinal information processing point. This can be remedied by supplying, non merely the operations directors but besides all the forces, with nomadic devices e.g. PDAs and Pocket PCs through which they can have, direct and entree information on assorted procedures and events in the organisation in real-time whenever they are. Using these devices, they remain invariably updated on what is go oning and provides an first-class dependable agencies of communicating channel to all.

Forecasting provides a company with an advantage in that it shows what the hereafter will be utilizing available informations hence gauging future occurrences/trends. This helps the operations directors to be after for the hereafter and reconstitute the system, if need be, suitably. It besides helps them plan the execution of the planned system well before manus. However, during prediction, a divergence or border of mistake, is inevitable as it is seldom perfect. Besides, if more information is available to be counted upon, so this increases the truth of the prognosis. A good prognosis should be dependable, accurate, seasonably and easy to use. The prognosis should besides be dependable as the way will take to a great extent relies on such a prognosis. The figure below shows a gross revenues prognosis for Dell Computer Corporation small-scale retail merchant for the following 5 months.

Calendar months Forecast of gross revenues Actual Gross saless Error Squared Error = E2

1 10 8 2 4

2 8 12 4 16

3 11 7 4 16

4 14 16 2 4

5 10 8 2 4

Entire 14 44

Entire absolute divergence ( TAD ) = 14

Mean absolute divergence ( MAD ) = S ( Actual prognosis ) /n = 14/5 = 2.8

Entire squared Error ( TSE ) = 44

Mean Square Error ( MSE ) = 44/5 = 8.8

With such a prognosis, the retail merchant is in a place to do an informed determination about how much stock to order and besides give dependable feedback about the market tendencies of that vicinity.


After carry oning a market research, it emerged that with the rapid progress of engineering, new merchandises and services are being introduced into the market at an dismaying rate. There is a broad assortment of merchandises and services that grows even wider by the twenty-four hours. Many inventions and new thoughts are being formulated and incorporated into merchandise lines so introduced to the market. With such a steady inflow of merchandises, Dell Computer Corporation ought to see cut downing the clip taken to develop and industry and present new merchandises to the market. Of class, there is a delicate balance between the rate at which the company can put to death new developments and the cost of such a major operation.

As we have seen, technological promotions are happening mundane and at an dismaying rate. Any concern venture should endeavor to upgrade their systems on a regular basis in order to avoid going disused. With this cognition, the company is invariably incorporating new promotions in engineering into its operations. The company s place in the engineering market puts in an advantageous place to work engineering as a strong point.

Provision of high quality goods and or services is the nucleus end of a fabrication company. Dell Computer Corporation provides high quality merchandises to its clients worldwide. But more than that, the company is captive on keeping the high quality degree of merchandises throughout the production procedure. At the same clip, the company tries to look into and command the production cost so that the cost of production is non excessively extortionate and run the hazard of cut downing the net income borders.

The human resource is one of the nucleus resources of a company. It is necessary for a company to put in its staff/personnel. Simply enrolling qualified forces is barely adequate to do a positive impact in a company. Dell Computer Corporation besides engages in staff seminars and changeless retraining and re-evaluating employees to better their accomplishments and public presentation in the company.

During the distribution procedure, the company is bound to interact with the client, either straight or indirectly through the usage of mediators like jobbers and retail merchants. This interaction is really critical. This is because to accomplish maximal gross revenues, all the participants in the distribution channel should be customer-friendly. Right from the location of the supply installation to the show of the merchandise, its packaging, bringing and client service, the procedure is designed to be user-friendly.

As witnessed in the market, rivals have merged to organize a formidable force and have increased their market portion vastly. Dell Computer Corporation looks frontward to placing and working jointly with possible spouses to organize strategic confederations and to pool the available resources with an purpose of spread outing the market portion and accordingly gross revenues.

As of September 2010, Dell Computer Corporation was figure 2 in Personal computer market portion behind Hewlett Packard and strike harding off Acer from that place. Taking into consideration the recent amalgamations and acquisition carried out by HP, it is clear that Dell is the pick of many for networking and technological solutions.