Changes in operation management, example of airline companies.
At first, it is important to understand what is operation management, it is a very global function and often seen as an abstract concept. The term “operation management” refers to the direction and control of the processes that transform inputs into products and services.
Here is theWaller’s definition: “Operations management is the planning, organising, and control of all the resources and activities to provide goods and services. It applies equally to manufacturing, and services in the private and public sector, and even government.” This definition tells us how wide this function is: It concerns all functional areas of any company.
With marketing and finance, operationmanagement is one of the 3 main functions that a good organization needs.
Operation management is a function that evolves in the time: Changes in the society are numerous and are the reason for new management methods, and the evolution of operation management.
Airline companies are very concerned by those changes; we will focus on Ryanair and its politics of drastic diminution of costs, and onYield management in airline companies.
I Society evolution factors
II Drastic diminution of costs, example of Ryanair*
III Yield Management in airline companies
I Society evolution factors
Society evolves each day, and this constant evolution pushes the companies to innovate in all their functions, including operation management. The four main society evolution factorsthat are at the origin of great changes are industrialisation, globalization, technology and competitiveness.
Industrialisation: Industrialisation was the first big step of the change. Thanks to industrialisation, companies got the possibility to produce more and faster. In addition, they could measure with precision their capacity of production, and their costs. It become much easier to controlindividuals and production means, increase productivity and reduce costs as much as possible.
Industrialisation was the origin of numerous changes, especially in the organisation of production line. One of the great innovations that appear with industrialisation is Taylorism. This method appeared in 1880 and was based on a scientific approach of work. It aims to define “The One best way” toproduce. Thanks to a thorough analysis of every component of the production system, including precise time measures.
Globalization: Globalization is responsible for many changes in operation management, and in the economy in general. Information, goods and people move faster from a place to another, this induces new possibilities. Companies can now reduce their costs by producing abroad. Theyalso are able to target more and more potential consumers. To benefit from globalization, companies have to improve operation management, dealing with transports problematic and overseas phone calls...
Technology : Technology has brought new means of production, and communication. The goods and services it selves are more and more numerous, and of better quality than before. It is now possibleto deliver goods or service very quickly. The different functions of a company communicate and work easier together thanks to a better fluidity of communication. Technology, and especially internet, allows companies to sell their goods or service at any time, to any customer in the world, for low costs (less staff). Computers treat the demand; take care of customer service, accelerating the allsell process, improving the client satisfaction. They also provide statistics that help firms to improve operation management, and marketing.
Competitiveness: The high competitiveness that we know today is one of the consequences of all the previous factors. Knowledge is shared, more and more companies are able to provide the same goods. Thus they have to improve marketing, and have lower costs...