The Importance of Operations Management

Operations management can play a crucial role in any business.

Most organizations provide a service or product, and it is the responsibility of the organization to ensure that products and services meet quality standards. Products and services should also benefit clients and customers by meeting their needs.

Proper operations management inspires productivity and efficiency during the production process, which in turn ensures that products and services are of the highest quality.

High quality products and services tend to attract more customers and clients, giving the organization an edge over the competition. It also increases revenue and can make companies leaders in their industry.

Keep reading to discover everything you need to know about operations management.

What is Operations Management?

Regardless of an organization’s size, industry, or profits, operations management can be an integral part of its functioning and efficiency.

Managing the supervising, organizing, and planning of goods and services production is referred to as operations management. It is a way for organizations to ensure that their input (like materials, technology, and labor) is successfully and efficiently converted into outputs (like products or services).

Operations management involves managing things like technology, human resources, equipment, information, and any other resources the company needs to produce its services and products.

In other words, operations management is responsible for getting the most out of the organization’s resources. Its goal is to increase the organization’s efficiency, productivity, and profits while reducing its waste and cost.

Operations Manager Roles

When new clients are brought on board, the operations manager is responsible for working out budgets, choosing employees for the projects, and helping to ensure that deadlines are met. Operations managers are also responsible for things like defining roles and responsibilities, helping with employee engagement, and overcoming obstacles to ensure that the organization continues to run smoothly.

Chief Operating Officer

An organization’s COO (Chief Operating Officer) is usually second in command, and one of the company’s highest-ranking executive personnel. They report directly to the CEO of the company (Chief Executive Officer) and are responsible for helping to ensure that the day-to-day operations in the organization run smoothly.

Operations Manager

The operations manager is responsible for production, staffing operations, overseeing product development, and keeping track of inventory.

While the specific responsibilities and roles of an operations manager typically depend on which service or product the company offers, there are some general responsibilities or operations management strategies across the board that fall into the hands of operations management.

Operations Management Strategies

Cooperation Between Departments

Because every operation in a company is cross-departmental, operations managers typically need to work alongside and cooperate with other departments.

In order to understand the needs of customers, for example, an operations manager usually works with the company’s marketing team. This helps to ensure that the services rendered, and products manufactured, by the company will be able to meet the needs of customers.

Similarly, an operations manager may need to cooperate with the purchasing department in the company to gain insight into things like the availability of materials, costs, quality problems, and sources of supply.

In turn, the operations manager will be able to maximize resources in the process of production, to achieve optimal productivity.

Designing Products

Another thing that operations management is involved in, is the design process and creation of products and services that are sold to customers by the company. This can include reviving old ideas, creating new ideas, and expanding on current ideas to create new products and services.

It is the responsibility of the operations manager to ensure that existing products and new products are designed in such a way that they suit and fill the need of the consumer.

Forecasting

Another responsibility of operations management is making the necessary forecasts; accurate future event predictions based on past trends.

For example, an operations manager often needs to predict the demands of consumers in relation to the products or services of the company. This is done by relying on market research and data (from the past and present) about the consumption of the services and products offered by the company.

Making such predictions can help a company determine the product volume that needs to be produced to meet market and customer demand.

Deliveries

Operations management oversees an organization’s delivery management. This includes ensuring that the services and goods are delivered on time, following up with consumers to confirm whether the delivery of their services or goods was correct, and checking customer satisfaction by making sure that the goods or services delivered met their needs.

In the case of an unsatisfied consumer, the operations manager has to obtain feedback and forward any complaints to the appropriate departments.

Supply Chain management

The supply chain process – each product’s entire process from raw materials to a product that can be sold – is also managed by operations management. The product production, shipping, distribution, and delivery are all managed by an operations manager.

Part of the job includes controlling the process of production, managing inventory, overseeing sales, and finding suppliers with reasonable prices to supply the company’s finished product.

When done correctly, this can help to reduce overhead costs, maximize efficiency in the production process, and deliver products to customers in a timely manner.

Improving and Optimizing the Process

It is the operations manager’s job to continuously look for ways to improve upon the existing processes in the company. For example, finding ways to reduce costs without compromising quality standards or customer satisfaction.

This is done by analyzing the production processes, determining what is done well and what is done incorrectly, checking results, and finding ways to improve.

Ideal Skills for Operations Management

There are several skills that aid in effective operations management.

Organization

An excellent skill to have when working in operations management is organization.

Operations management is responsible for planning, executing, and monitoring projects from start to finish, and needs to retain focus while doing so. These managers often have to oversee and supervise various projects and processes at once, without getting overwhelmed or distracted.

For this reason, having good organizational skills can help to ensure maximum productivity and production efficiency.

A lack of adequate organization can lead to piles of uncompleted tasks and the loss of important documents or valuable company time, which affects the project’s success.

Good People Skills

Because of the near-constant interaction with people, across multiple departments, it can be very beneficial for those in operations management to have great people skills. These managers need to be able to relate with customers or clients, colleagues, company employees, senior managers, and stakeholders – on both a personal and professional level.

Additionally, good people skills also require good listening, communicating, being tolerant, understanding differences, and resolving conflicts.

Coordination

Coordination is another great skill to master when working in operations management.

This includes simultaneously acting out several different activities and switching between them, without negatively impacting production. It also includes the integration and use of time, resources, and activities in order to reach company goals.

Good coordination skills can also be very useful in times of crisis or disruption. In such situations, it is often the job of operations management to come up with solutions quickly, and guide the company toward returning to the normal routine.

Tech Savvy

In this day and age, technologies are advancing at a rapid pace. It is the job of operations management to stay informed on all the technological advancements and improvements in their respective industry.

In turn, these advancements can be used for design process improvement, and managers can ensure that their business processes are tech compliant and efficient. Technological innovations can also be used to improve the company’s internal processes, via things like automation.

When modern organizations rely on technology for carrying out operations, it also gives them an edge over competitors in the market.

The Benefits of Operations Management

When an organization has a seamless operations management process, there are many benefits. These include high-quality goods and services, satisfied customers, motivated and productive employees, increased revenue, reduced costs, and a competitive advantage over other companies.

Quality Management of Products and Services

Operations management normally has a list of processes and a checklist with the objectives of the company and the needs of the customer. It is then used during pre-production to make sure that everything on the checklist is met.

This is also a great way to ensure that everyone involved in the project is aware of the goals the product or service needs to achieve in order to meet customer demand.

Upon completion, the final product will also be assessed by operations management with this checklist in mind, and the pre-production and manufacturing process will be reviewed to ensure maximum efficiency.

Compliance

Organizations need to adhere to a set of rules and regulations, in order to avoid fines. It is the job of operations management to ensure that these rules are followed and that the company is operating in a lawful manner.

Employee Motivation and Productivity

When employees feel left out of the loop, or as if they are not contributing to the company in a meaningful way, they can become demotivated and less productive.

Operations management is responsible for ensuring that employees understand their roles in the organization and how they contribute to the company’s success. This maximizes the efficiency of production and makes for a happier working environment.

Satisfaction of Customers

Negative customer reviews can be bad for the reputation of a business and make it difficult to gain and retain clients. For this reason, it is important to keep customer satisfaction and the needs of consumers in mind when creating products or services.

A quality Management process is conducted by operations management to ensure that products and services meet the needs of customers. In cases where the organization is a service provider, customer satisfaction is especially important, and the operations manager will have processes in place to ensure the quality of the service.

There are several activities involved in gaining customer satisfaction. These include:

• Production Planning – Making sure there are no production lapses, and that goods or services are delivered in a timely manner
• Quality Management/ Quality Control – Ensuring that the company maintains consistently good products or services
• Employee Capacity – Making sure that the right employees are selected for the right project roles
• Inventory Management – Ensuring that the organization can keep up with the demands of customers

Reduce Costs

When a company adequately maximizes its production of quality services and products, its productivity, and its customer satisfaction, there will be a significant reduction in production costs and the costs of rendering services. In turn, there will also be a waste reduction and an increase in revenue.

This can be achieved by effective operations management.

Revenue Increase

When an organization has a good reputation and a high rate of customer satisfaction, it can lead to expanding a customer base or gaining a new one, which then leads to a revenue increase.

Revenue growth in a company can help to launch new services and products and provide an increase in resources.

Competitive Advantage

Effective operations management is a great way to ensure that a company is ahead of the competition, giving it a competitive edge in the market. This can be done by managing the internal and external factors in the organization and consistently ensuring that the products or services of the company are tailored to consumer demand and industry trends.

Tactical vs. Strategic Operations Decisions

To ensure that operations run smoothly, there are important decisions to be made. These include both tactical and strategic operations decisions.

Strategic Operations Decisions

Decisions in a company that has long-term consequences and effects are referred to as Strategic Operations Decisions. Often, these types of decisions require resource commitments and large expenses.

Examples of strategic operations decisions include:

• The location of each production facility
• Organization of labor and equipment
• The kind of technology that will be incorporated
• The long-term capacity and resources of the organization

Tactical Operations Decisions

Decisions in the company that have short-term or medium-term effects and consequences are referred to as Tactical Operations Decisions. It is easier for these to be revised or changed, and they have smaller expenses with fewer resource commitments.

Some examples of tactical operations decisions include:

• Contracting vendors
• Managing inventory
• Scheduling workforce
• Ensuring quality assurance

Conclusion

Operation management requires setting objectives, targeting the increase of revenue, capacity planning, optimizing the delivery of services, and ensuring quality products. Maximizing production efficiency is also done through the help of operations management.

It is important for those working in operations management to understand the roles they play in the company’s bigger picture.

With effective operations management, a business can gain an increase in revenue, maximize profitability, reduce operating costs and waste, successfully reach goals, and increase consumer satisfaction.