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Strategic Operation Management

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Introducrion to Strategic Operation Management

In order to ensure that an organization goals and objectives are met, it is necessary to manage its operations strategically. Taking a broader view one can say that while planning for operations management involves supervising in context of production, manufacturing  or the provision of services (Hill, Jones and Schilling, 2014). Apart from managing above functions, managing of waste is also important through which any hospital  can increase its profitability. The concern industry while managing waste needs to identify what waste is and where it exists. If hospitals are producing any medicines the waste can arise from over production, inappropriate processing or transporting them from the place of production to place of use. Waste can also occur in terms of wasting patient and doctor's time, if proper management of consulting according to patient availability is not done. So depending upon various hospitals way of functioning, source of waste and its related waste management should be planned.

In the present context of report discussion is done on the operations management of various hospitals in London which are acting as teaching hospitals along with the provision of general beds, wards and operation theatres along with providing air ambulance with tertiary services for the city which involves providing facilities in the nature of advanced medical investigation. Therefore in order to ensure proper management of its large scale operations it is very necessary that its operations regarding its services and waste management should be planned properly and in a strategic way.

1.Theories to Manage the Process Types 

Importance of Process Management and How it Can be Done

It is essential to deal with the volume and variety issues in a hospital, so that different  requirements can be met at  the correct time. Further it is necessary to manage cost with  revenue so that the  highest operating profit can be achieved(Aaker, 2008).Additionally with the increased competition it is important to maintain the service quality and patient satisfaction which can only be achieved by proper resource management of various processes carried out by the hospital which includes managing its personnel, equipment, beds and the concerned specialist time. Referring to managing services in operation theatre, various approaches for measuring process orientation are:

Information system approach

In order to manage work of the hospital regarding information of its various departments, help of information system is taken which can manage the care, coordination and supply activity and logistics. By maintaining the record of various supplies, in the information system, designed for hospitals, the authorities are aware of the deficiency of each department and each process, like for example where and when there is the requirement of  equipments for diagnosis, treatment in the hospital and services provided in the form of specialized doctors can be checked and controlled by information system. When considering about the logistics special care should be given in maintaining the cost efficiency of different materials needed by the hospital like medicines, devices etc. (Hitt, Ireland and Hoskisson, 2012).

Application of management and organizational theory

With the help of management and organizational theory  hospital can assess about the application of six organizational instruments which are connected with process management and  of decentralization. Process management consist of managing the process flow, vertical integration, resource flexibility, customer involvement and capital intensity. In  context of Royal Hospital major consideration should be given to the process flow, job shop process and batch flow process(Ward and Peppard,  2016)

Process flow

In process flow consideration is given while deciding the construction of  hospital which involves high degree of job customization. Next is the job shop process which involves creation of emergency rooms, general wards, testing and teaching laboratory as well as examining  teaching rooms which provides  flexibility to carry out various operations smoothly and to determine the demand of each independently and without any confusion(Slack, 2015) Next is the batch flow process which specifies about the materials that are to be ordered in batch size depending upon their frequency of requirement and finally managing the line process which involves seeing the requirement that which materials are needed from the very beginning of entering the hospital. This also involves managing the continuous flow process which needs to be operative irrespective of the operations carried out in the hospital like generation of proper electricity, maintaining cleanliness in very part of the hospital(de, Wood and Gelade, 2010)

Vertical integration

In vertical integration general hospital has to make sure that those medicines which it is not producing in house are to be outsourced from other suppliers. In involves make and buy decision  which signifies more vertical integration in case of make and more outsourcing in case of buy. In hospital context it can refer to having its own manufacturing plant of producing materials like syringe, and some copyright medicines. If the hospital adopts more vertical integration it can  help it to cover the global markets by selling its copyright drugs and medicines all over the world. Adopting vertical integration can also helps the hospital to invent latest method of producing a particular medicine which can further leads to saving in cost of production(Vego, Kučar-Dragičević and Koprivanac, 2008) while adopting outsourcing regarding the purchase of various kinds of medicines and equipment, the hospital can concentrate on its major activities like provision of up to date services regarding teaching of medical students, regarding this the hospital needs to take actions regarding maintenance of up to date library, scheduling the time of doctors so that they can concentrate on the lectures as well as the time of treating their patients.

Customer Involvement

Process management can also be done by the involvement of patients by keeping an option to the patients regarding the provision of the services at their homes. In order to properly manage this service the hospital can take the help of patients feedback regarding the professionals which are treating them at their homes.

Resource flexibility

Next come the part of having resource flexibility which involves product and volume flexibility. In product flexibility an organization should determine the products with lower life cycle and which require continuous up-gradation to maintain their efficiency. Therefore Royal Hospital should make records of expiry dates of medicines and if there is any upgraded version of them is available in the market. Under work force flexibility consideration should be given in managing the rotational shift of  employees so that availability for  24 hours  can be maintained which is  necessary in case of a hospital. Apart from this whether the present workforce is competent and the process needs to be adopted in recruitment process. For this concerned hospital needs to manage its cost on recruitment cost as per the the budget decided for the same.

Capital outlay

Other important decision is to be taken is of capital outlay that is the extent to which  money is to be invested on each process so that equipment, professional services and personnel can be assigned depending upon the assigned benchmark. This helps in assessing and maintaining  flow as per the requirement. Capital outlay can be depended on the degree of availability of automation of machines and their requirement by the present hospital(Büyüközkan and Çifçi, 2012).

Managing all these above mentioned points will help the hospital in maintaining the quantity of materials in its various departments.

2.Economic order Quantity

It is necessary to maintain the levels of inventory in hospital so that  working in its operations can be carried out in a smooth manner. To maintain the level of stocks along with cost effectiveness EOQ can be an approach adopted which focusses on minimising the ordering and carrying cost as per the annual requirement of inventory which can help the hospital to achieve  cost efficiency(Brandao de Souza, 2009). Royal Hospital can apply this in managing the inventory requirement in its pharmacy where demand of particular medicines are constant and its annual requirement can be easily identified. . Further EOQ helps in reducing the time between demand and supply of materials which is also the outcome of proper inventory and control.

Some assumptions has to be made by the hospitals authorities while deciding  the economic order quantity which are:

  • Ordering cost remains constant
  • The requirement of particular medicines are known and it is evenly spread throughout the year.
  • The purchase price of  material is constant.
  • No delays are observed in the delivery cycles and they are delivered in the batch size that was being ordered.
  • The bottlenecks identified in the above points will help in solving the problems in the implementation of this model.
  • EOQ can help the hospital to plan its cash flow blockage in inventory balance.

The major cost involved in EOQ are ordering cost which is incurred every time an order is placed and the cost to store  ordered quantity and  purchase price of each unit(Guerriero and Guido, 2011)

It is expressed in numerical form in terms of:

Where Q is expressed as EOQ

D= is the annual requirements

S=Ordering cost per order

H=carrying cost per unit.

For example for estimating economic order quantity with reference to the requirements of beds, considering all assumptions regarding EOQ holds good, the annual demand of beds are considered as 50, purchase price of each bed is 20 pounds, ordering cost per order is 5 pound and carrying cost is 5 pound per unit per annum, then by application of EOQ:

2*50*5 divide by 5=100 and by taking root of 100 we get 10. Therefore Economic order quantity is 10, which shows that the order size at a particular time should be 10 beds minimizing the hospital overall cost.

Referring it to  hospitals for managing inventory, it can maintain its inventory which is used by the hospital in providing its integral services like infection control, cancer care, insomnia, irritable bowel , musculoskeletal medicine etc. For maintaining inventory of medicines under this service and other goods, the hospital needs to evaluate its present demand as per the frequency of cases(Yang and Lin, 2009) Then it has to consider whether there is a requirement of additional warehouse to match the supply with the demand or not. If yes then the carrying cost will accordingly be increased. The specific advantages that accrue by implementing this model in the hospital:

The EOQ determination will help in determining the safety level along with the specification of minimum and maximum re order quantities as EOQ specifies that quantity on which the ordering of the inventory should take place. There are various software available for calculation of the same, which further solves the problem of its complex mathematical calculations(Haux, Winter,  Ammenwerthand and Brigl,  2013.)

As this model require assessing the demand, therefore continuous monitoring of the inventory is done solving the problem of its emergency requirement.

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As this model solves the two main problem of how much inventory is to be ordered and when it is to be ordered.

3. Implement of Total Management Quality for hospitals

The progress of any hospital is judged on the basis  of satisfaction level of its patients. Hospitals funding system also depends upon the ratings given by its patients. Due to lower ratings its funding management can be affected which is not a good sign for managing the hospital according to future requirements(Subramanian and Ramanathan, 2012) Therefore managing the quality of work from the lower to the highest level is important to maintain the efficiency all throughout and reduce the patients complains. In a hospital level applying TQM will help them to solve the major problems that are being faced by the patients in terms of its services. In order to find out this problem various survey can be conducted in which the present and the past patients can be asked to share their services regarding the hospital services.

Further as the aim of total quality management is to adhere to the performance targets fixed by the hospital standards board, it helps them to achieve the benchmarking assigned for each process or department(Kumar, Ozdamar and Ning Zhang, 2008).

TQM can be implemented in any field of Royal various hospital including accounting, administration like maintaining the cleanliness and safety of the hospital, providing various services like consulting, operations, management of materials, research and development conducted for various field of interest like development of any drug or invention of any method of doing a particular task, ways of providing education to the future medical students which can lead to enhancement of hospital brand image and helps to identify the bottlenecks in its further success(Hill, Jones and Schilling, 2014).

Impact of TQM

The main negative impact of TQM is that it involves specific training to be given to the employees involved it its implementation, therefore they need to be taken away from their actual workplace which can lead to short term increase of cost. Also TQM involves continuous series of changes it can sometimes be resisted by those employees who prefer the current system and feel that they loose their jobs because of it(Hitt, Ireland and Hoskisson, 2012).

A study in TQM suggests that small hospitals and healthcare institutes are more successful in implementing it as compared to the larger ones as the smaller system are generally easy and more simpler to amend. So Royal various hospital should conduct the study for various TQM procedures adopted by various small scale hospitals in order to know the major success points in them. Further with time when applying TQM over a consistent period of time benefits like:

Cost Reduction

While applying TQM consistently, personnel become aware of the quality standards to be achieved therefore it minimizes their cost in the form of waste reduction and amount spent on rework. This savings generally flow directly without incurring any additional costs therefore it ultimately leads to an increment. Like Royal Hospital while following TQM in  research and development work, if the particular researcher knows that developing a particular medicine requires this quality standard to be meet, after initial trials the researcher will gain expertise which leads to minimization of waste.

Customer satisfaction

As more time is devoted in providing initial services to patients, adhering to the specified quality requirements, therefore it will reduce the resources which is diverted in solving patient complaints which ultimately increased the positive ratings given by the patients and therefore the funding given by the government can be maintained. Patients  satisfaction leads to their loyalty towards the healthcare institute that compel them to consult it every time they come up with any medical issue. They also gives suggestions to other people to consult the concern hospital in case they come up with any healthcare issues

Defect Reduction

TQM believes in improving quality in process rather than inspecting the quality in process, therefore time required to fix errors is reduced. For that it requires employing quality management team in the hospital(Slack, 2015).

Morale

Working for the hospital and serving patients with the best quality in service, morale of the persons working for them increases and it motivates them to perform even more in a better way. This indirectly reduces the employee turnover, which ultimately leads to the reduction in cost of hiring and training new recruits(Vego, Kučar-Dragičević and Koprivanac, 2008).

Increases the efficiency of the present workforce

As the present nurses, ward boys are habitual of doing the work in keeping in mind the various quality standards they become perfectionist in the discharge of their duties like serving people, maintaining the requirements of different equipments and medicines in operation theatre and check on proper intervals whether it is working properly or not. Further they know how to handle the patients which are operated so that the petty issues can be solved in the initial level and are not been disrupted in the discharge of important duties.

Conclusion

With the present report it can be concluded that managing operations strategically in healthcare industry is also equally important as managing operations in any other industry. With the growing number of patients and the health issues faced by them it furthermore becomes important to deal with each and every patient in a proper way that leads to their maximum satisfaction(Brandao de Souza, 2009) Therefore in the present context of Royal various hospital inferences can be drawn that in order to manage its large scale healthcare services ranging from women health to stress management and providing the specialist advice in the field of pharmacy, the hospital needs to manage its team of team of professionals and the requirement of drugs and medicines in the discharge of these services. Therefore the importance of EOQ and Total Quality Management is shown in this context.

References

  • Aaker, D.A., 2008. Strategic market management. John Wiley & Sons.
  • Brandao de Souza, L., 2009. Trends and approaches in lean healthcare. Leadership in health services, 22(2), pp.121-139.
  • Büyüközkan, G. and Çifçi, G., 2012. A combined fuzzy AHP and fuzzy TOPSIS based strategic analysis of electronic service quality in healthcare industry. Expert Systems with Applications, 39(3), pp.2341-2354.
  • Büyüközkan, G., Çifçi, G. and Güleryüz, S., 2011. Strategic analysis of healthcare service quality using fuzzy AHP methodology. Expert systems with applications, 38(8), pp.9407-9424.
  • de Menezes, L.M., Wood, S. and Gelade, G., 2010. The integration of human resource and operation management practices and its link with performance: A longitudinal latent class study. Journal of Operations Management, 28(6), pp.455-471.
  • Guerriero, F. and Guido, R., 2011. Operational research in the management of the operating theatre: a survey. Health care management science, 14(1), pp.89-114.
  • Haux, R., Winter, A., Ammenwerth, E. and Brigl, B., 2013. Strategic information management in hospitals: an introduction to hospital information systems. Springer Science & Business Media.
  • Hill, C.W., Jones, G.R. and Schilling, M.A., 2014. Strategic management: theory: an integrated approach. Cengage Learning.
  • Hitt, M.A., Ireland, R.D. and Hoskisson, R.E., 2012. Strategic management cases: competitiveness and globalization. Cengage Learning.
  • Kumar, A., Ozdamar, L. and Ning Zhang, C., 2008. Supply chain redesign in the healthcare industry of Singapore. Supply Chain Management: An International Journal, 13(2), pp.95-103.
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