How can operations management respond to the rising oil prices?
by Hosein Piranfar
International Journal of Services and Operations Management (IJSOM), Vol. 2, No. 4, 2006

Abstract: Except for a few brief shocks in recent years, the world has not witnessed serious pressures from the rising price of oil since 1974. What we are experiencing now is different in nature. New discoveries of oil are slow, alternative sources of energy are not yet in wide-enough public use, and there is a huge rise in demand for oil from the newly advanced developing countries such as China, India and Brazil. This paper aims to investigate the European businesses' response in terms of adjusting their operations management to this environmental change. For this end, the question was put to a number of managers associated with a variety of businesses. The response was expected to be limited to performance measures such as quality, speed, cost, flexibility and dependability as a means of combating the higher cost of energy. In practice, the respondents came out with more interesting ways of dealing with the problem. Classifying their views revealed an interesting pattern showing that these managers were thinking ahead with ideas that could contribute beneficially to strategic planning of operations. This paper starts with a background study of the oil crises, outlines the respondents' views on the use of operations management and concludes with an examination of the alternative sources of energy with their dilemmas and promises.

Online publication date: Tue, 11-Jul-2006

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