How does operations management work

Operations management takes charge of the production process entirely and ensures that every step is efficiently carried out to ensure maximum productivity. Every organization, despite the size or industry, needs operations management. It ensures that organizations meet their goals, and it helps to maximize profitability. In the next few minutes, I will introduce you to the profitable world of operations management.

You will learn what operations management is, how it benefits your organization, and everything you need to know to make operations management work in your organization. Operations management is managing the planning, organizing, and supervising of the production of goods and services. It ensures that your organization successfully converts inputs labor, materials, technology, etc. It involves managing information, human resources such as staff , equipment, technology, and other resources needed to produce goods and services.

Operations management is an integral function of every organization regardless of its size, industry, whether it is service or manufacturing, or whether it is for-profit or not. Here is a video that will help you further understand what operations management is. It is pretty self-explanatory, and it contains practical and relatable examples.

So, before you continue reading, pause for a minute to watch this. Now, you have an idea of what operations management is. But before we move forward to the juicy parts, where I explain why you need operations management and how you can effectively manage your operations, let us take a trip down history lane.

The history of operations management is a long one because it dates to ancient times. Its origins can be traced as far back as B. When the Industrial Revolution came, between the s to the early s, it introduced two essential keys to efficient production: division of labor and interchangeability of parts.

In , Frederick Taylor timed tasks for complex jobs using the stopwatch method. This method became important in studying productivity and efficiency. Move forward to , where Frank and Lillian Gilbert took this a notch further. They laid the foundation for a system called predetermined motion time systems PMTS.

This helped people predict the time it would take to complete tasks. Thanks to this concept and how well it worked, production management for improving productivity became a hot topic among manufacturers. From the s to the s, it developed into a separate discipline, bringing to life other concepts like Taylorism , production planning , inventory control , etc. As the world developed and service-based companies began to flourish, people began to integrate the numerous functions in manufacturing, including operations management, into services.

For example, in , FedEx began overnight package deliveries. And today, service-based companies like Amazon offer same-day delivery on orders. Once service-based companies began using product management principles in planning and organizing their processes, the name changed to operations management. If you want to learn more about how operations management came into being, save this slideshow for later reading.

It will lead you through the historical evolution of operations management. The success of an organization solely depends on its operations and how they are effectively managed. It is no surprise that some companies have several operations employees and allocate a huge budget to that department.

Forbes made a report in that three-quarters of CEOs come from an operations background. Proper operations management makes sure that the products manufactured and services rendered are top-notch.

The operations management unit examines the durability and reliability of every product before it is delivered to the consumers. This unit also ensures that there are laid-down processes that make sure that service-based companies deliver top-notch services to their clients.

With all these in place, customer satisfaction is guaranteed. It makes sure that all the resources from raw materials to human resources are utilized adequately during the production process. The outcome of this is increased productivity. Effective operations management gives you a competitive advantage over your competitors. If operations management is carried out successfully, you will have better outputs, which means your products and service will become better and more tailored for the market.

This makes it possible for your organization to stand out from the competition and gain new customers. The cost of producing products or rendering services will be significantly reduced when productivity, production of quality products, and customer satisfaction are adequately maximized.

Reduced cost of operations, in turn, leads to increased revenue. It also leads to waste reduction. Only effective operations management can make this happen. Apart from these discussed above, operations management also helps boost technological advances within an organization, ensuring that there are correctly functioning processes and ensuring profitability. By now, you already know how operations management can transform your organization.

The next question is: if you want to implement operations management in your company, who should be in charge? Whose job is it to ensure that operations are effectively managed? There are two specific roles in operations management. These two people ensure that operations within an organization are effectively carried out. The chief operating officer is one of the highest-ranking executive personnel in an organization. This person is responsible for the day-to-day operations of the company.

The COO is often the second in command and reports to the chief executive officer. An operations manager oversees product development, inventory, operations staffing, production, etc. The specific roles of an operations manager are usually dependent on the type of product or service the company produces. However, there are general responsibilities of an operations manager, notwithstanding the industry.

They include:. First, you need to note that operations are cross-departmental. That means an operations manager must work with other departments. Also, an operations manager must work with the purchasing department to understand the cost, quality issues, availability of materials, sources of supply, etc. Having this information helps the operations manager maximize resources for optimal productivity during the production process.

This involves creating a product or service that the company can sell to a customer. New ideas are created, old ideas are revived, and current ones are expanded to produce new products or offer new services. The operations manager must ensure that both new and existing products are designed and produced to suit the needs of the consumers. Forecasting is all about making accurate predictions of events that will happen in the future based on what happened in the past.

This prediction helps the company know the volume of products they have to produce to meet market demand. They make sure that goods and services are delivered to the consumer on time. If the consumer is unsatisfied with the product or service or the delivery, the operations manager gets the feedback and forwards the complaint to the relevant departments. Supply chain management is the management of the production process of a product, from raw materials to finished products.

This includes everything from production, distribution, shipping, to the delivery of the products. If this is done correctly, there will be reduced overhead costs, efficient production process, and timely delivery of products to the consumers.

They should analyze the operations process, figure out what they are doing right or wrong, check the results received from the current process, and look for ways to improve it. For example, an operations manager should always be on the lookout for the best way to reduce the cost of production without tampering with the quality of the product.

For operations managers to effectively perform all the required duties, there are some skills they need to possess. These skills include:. An operations manager should be able to supervise different projects without getting distracted or overwhelmed by the numerous processes.

They should be able to plan, execute, and monitor every project from inception to finish without losing focus. Staying organized is key. If not, uncompleted tasks will pile up, the company will lose valuable time, and important documents may get lost. And this can hinder the success of the project. An operations manager is constantly interacting with people.

Operations managers know how to communicate, listen, and relate with their colleagues, both on a personal and professional level. They should know how to carry out specific activities simultaneously and switch between activities without affecting production negatively.

Coordination also involves dealing with crises and interruptions, quickly proffering solutions, and efficiently going back to the normal routine functions to prevent delay or further disruption. An operations manager needs to stay informed of all technological improvements within the industry, especially since we are in the age of rapidly advancing technologies.

This is the only way they can design processes that are efficient and tech compliant. Many modern organizations depend on technology to carry out their operations, giving them a competitive advantage in the market.

If the operations manager stays up to date with the latest tech innovations, they can use the innovations to improve internal processes. For example, processes that used to be conducted manually can become efficient automated processes. It is needless to say that there are important decisions that must be made to ensure that operations are smoothly carried out from start to finish.

There are two major kinds of operations decisions, namely strategic operations decisions and tactical operations decisions. Strategic operations decisions are decisions that are strategic in nature.

This means that they have long-term effects and consequences, and they usually require huge expenses and resource commitments. Unlike strategic decisions, tactical operations decisions have short- to medium-term effects on the organization. These decisions can be changed or revised more easily than strategic decisions, and they involve less commitment of resources. Tactical and strategic operations decisions make it possible for an organization to achieve a competitive advantage over its competitors, making it easier to attract and keep customers.

You should note that the role of an operations manager is centered around the operations systems of an organization. They must understand the nitty-gritty of operations systems to carry out their duties effectively.

The idea that operations management covers the production and delivery of products and services from beginning to end can seem overwhelming. There are many activities involved. The question is: how do these activities or functions stay connected? You are about to find out how. A system can be defined as an organized collection of integrated parts to accomplish a bigger goal. A system usually has several inputs that undergo certain processes and eventually become outputs, which together help to achieve the desired goal for that system.

An operations system consists of the primary activities in operations management that are entirely and efficiently integrated to produce valuable goods and services to consumers. Going through the operations system from start to finish requires you to go through different phases, one phase leading to another to ensure the overall success of the systems. You can go ahead to manufacture a prototype of the product and also conduct a feasibility study.

This involves specifying how many products or how much service will be manufactured or delivered and how often. At this point, you have to predict and forecast the demand for these outcomes your products or service. The market research you have done will be instrumental at this stage.

To make things easier, you can hire an expert who knows all about developing that product or service. Scheduling production processes Production Scheduling Approaches for Operations Management Scheduling in operations management. Supply chain activities cover everything from product development, sourcing, production, and logistics, as well as the information systems needed to coordinate these activities.

Inventory includes unprocessed materials, finished products, supplies and works-in-progress. Inventory management is a part of supply chain management that oversees the inventory items from manufacturers to storage to where they are sold. There must be a very careful balance between the size of the inventory of items compared to the actual rate of their sales.

Too many items in inventory means their costs are not recovered in a timely manner from their sales. It also might mean high costs of storage. Insufficient numbers of items means the organization cannot meet the customer demand, resulting in lost revenue.

What is Inventory Management? In the past, an organization was expected to provide a product or service to the customer, and then that transaction was done -- the activity was done to the customer.

The customer was more or less at the mercy of the organization. Today, that is changing dramatically. Customers have a much wider range of organizations, products and services to choose from, and they can access them instantly. Customers can also access numerous sources of useful opinions or reviews about the product or service even before they buy them.

Thus, it is more important than ever that organizations remain very good at attracting, satisfying and retaining customers. That requires a carefully designed and implemented customer services plan. Service design "is the activity of planning and organizing people, infrastructure, communication and material components of a service in order to improve its quality and the interaction between the service provider and its customers.

Service design may function as a way to inform changes to an existing service or create a new service entirely. Quality management, including quality control, is crucial to effective operations management, particularly continuous improvement.

More recent advancements in quality, such as benchmarking and Total Quality Management, have resulted in advancements to operations management as well. Quality Management. Quality control can be defined "part of quality management focused on fulfilling quality requirements. An alternate definition is "the operational techniques and activities used to fulfill requirements for quality.

In the context of operations systems, productivity is defined as the ratio of the output to the input of the system. The higher the ratio, the more productive the system. One of the most common measures of productivity is output per hour.

This is important especially in manufacturing industries. Where many guidelines are in regard to increasing employee productivity, Productivity: A Practical Handbook distinguishes between three factors that drive productivity, not all of them around employee productivity, including:. The above Handbook is a very useful overview of the many different methods to improve productivity. Here are various measures, or indicators, to help monitor and assess the levels of productivity.

Measuring Productivity Levels Operations Management scroll down to "Metrics: efficiency and effectiveness". Organizations Journals. To round out your knowledge of this Library topic, you may want to review some related topics, available from the link below. Each of the related topics includes free, online resources. Also, scan the Recommended Books listed below. They have been selected for their relevance and highly practical nature. By continuing to use this site, you agree to our Privacy Policy.

Various Definitions Operations management focuses on carefully managing the processes to produce and distribute products and services.

Operations management is concerned with converting materials and labor into goods and services as efficiently as possible. Corporate operations management professionals try to balance costs with revenue to maximize net operating profit. An operations system includes, for example: Inputs -- such as expertise, best practices, funding, equipment, facilities and technologies, as well as the customer's feedback and the overall organization's strategic priorities Processes -- such as planning capacity, product and service design, production, facilities, jobs, inventory, quality control, etc.

Align Operations Systems With Strategic Planning Notice that one of the inputs to the operations system is the strategic priorities of the organization. Clarify how the new products and services should best be provided to those target markets. Identify competitors, as well as potential collaborators. Suggest the best terms in pricing for the products and services.

Suggest how best to advertise and promote to those groups of customers. An operations manager is integral to the stability and growth of a business. Employment can be found in just about any industry; transportation, retail, insurance, healthcare, construction, hospitality, and manufacturing to name a few. What is an Operations Manager? What does an Operations Manager do?

Duties of an operations manager may include: Improving the operational systems, processes and policies in support of the organization's mission Supporting better management reporting, information flow and management, business process and organizational planning Playing a significant role in long-term planning, including initiatives geared towards operational excellence Developing individual program budgets Managing and increasing the effectiveness and efficiency of support services HR, IT and Finance, through improvements to each function as well as coordination and communication between support and business functions Driving initiatives in the management team and organizationally that contribute to long-term operational excellence Are you suited to be an operations manager?