What Is Operations Management?
Operations management is the administration of business practices and processes to enhance efficiency within an organisation. It helps to create goods and services from the raw materials as efficiently as possible to maximise profit. It is the key to run the day-to-day tasks effectively. Furthermore, it oversees multiple departments and provides multiple goals. It is responsible for streamlining processes, balancing revenue and costs, developing strategic plans and overseeing production, logistics and supply chain.
What is the purpose of operations management?
Operations management aims to create, implement and support efficient business processes. These processes oversee the production, manufacturing and delivery of final products to customers. This team aims to improve the production system for long-term growth by designing, managing and solving issues. It ensures that the product meets the customer’s expectations. Furthermore, it maintains a balance between the operating cost and revenue to boost profit and help businesses succeed.
What are the goals of operations management?
The overall goal of operations management is to help businesses achieve success. This final goal has many sub-parts that are mentioned below:
- Maximising organisation’s efforts of producing goods and/or services.
- Managing supply chain and infrastructure.
- Controlling costs to maximise profitability.
- Properly allocating resources for production.
- Reducing operating costs by coordinating business tasks.
- Ensuring qualified people are in the right position.
- Monitoring the performance metrics.
- Identifying and solving issues in production, processes and supply chain.
Types of operations management
There are mainly three types of operations management, depending on their focus including:
Objectives management
In this type, the focus is on objectives. It includes defining priorities, making operation decisions based on business goals and aligning operations with the company objectives.
Task management
Assigning tasks before going on to the next stage of daily operations management using work-in-progress and linear workflows.
Individual management
To optimise operations, managers and workers who are doing the work on the ground provide real-time information.
Systems of operations management
Modern operations management revolves around four theories, which include:
Business process redesign (BPR)
In this system, the company’s processes and systems are analysed to identify the challenges. Then the strategy is redesigned to resolve the issues. BPR enables the company to completely change the way it operates to improve efficiency and create value for customers. For example, if an offline cloth store foresees that people will buy clothes online in the future, they need to build a strategy that focuses on creating an online store. For this, they have to redesign their complete approach.
Reconfigurable manufacturing systems
These are production systems that are developed to take modifications and reconfigurations. It enables the system to quickly adapt to variations in production volume by modifying both its functionality and production capacity. For example, if a car model is in more demand, the company can adjust the production to produce more of that model without hindering other productions. This flexibility helps to maintain a high level of productivity and efficiency.
Six Sigma
Six Sigma is directly related to the quality of a product. In Six Sigma, the term “six” denotes the control and maintenance of limits that are set at six standard deviations from the mean of a normal distribution. Companies use the Six Sigma method, which involves statistical analysis and data collection, to identify and eliminate mistakes and faults while increasing manufacturing efficiency.
Lean manufacturing
This process helps to eliminate waste and increase productivity. This system focuses on using resources to the maximum and create value for the customer. It also ensures the quality of the product.
Why is operations management important?
Companies implement operations management to achieve their goals by streamlining work and increasing productivity. Here are some reasons why it is important:
Reduces waste
Business activities like manufacturing create a lot of waste. Operations management helps to minimise losses. Controlling the time and resources reduces the chances of overproduction, defects, inventory damage, waiting periods and overprocessing. Reducing waste increases productivity and profits.
Ensures product quality
It ensures the best quality of products and services. This helps to maintain quality standards and implement standardised quality assurance procedures. Furthermore, this team can protect the reputation of the organisation and increase sales.
Improves customer satisfaction
This team helps to improve customer satisfaction, increasing overall revenue. Satisfied customers promote brand loyalty and may result in positive reviews and referrals. In addition to ensuring quality, the team’s emphasis on waste reduction can attract customers and motivate them to make purchases.
Employee productivity
Operations management also helps in boosting employee productivity. Employee productivity is maintained by resolving the issues arising in the operations and implementing better standards and processes.
Increase revenue
Improved product quality and customer satisfaction help the company to build a brand image. This image attracts more customers and expands its market share. The result is an increase in the revenue of the organisation.
Challenges of operations management
Operations managers face some challenges daily while working on the business processes. These challenges are:
Globalisation
There are many global businesses. It can be difficult to operate within their scope, manage intricate supply chains and adjust to a changing environment. Also, it becomes more challenging when dealing with different languages, cultures, laws and labour markets.
Technology
Sometimes it becomes challenging to find the right tools and technology. It also becomes difficult to keep up with rapidly changing technology and integrating them into the production processes.
Talent management
An operations manager always struggles to attract, train and retain high-quality and talented employees. Furthermore, keeping the employees motivated and engaged is also a demanding task for the operations managers.
Streamlining processes
It can be difficult to determine which parts of the manufacturing process should be improved or eliminated without affecting the efficiency. Implementing changes in the process can be challenging as it can hinder the production. Furthermore, it is quite challenging to determine if the changes implemented have the desired result.
Best practices for operations management
The best practices allow the employees to work efficiently and deliver products or services on time. The best practices are as follows:
Using technology
The use of technologies like automation helps to eliminate more and more routine business processes. This may result in saving time and resources for the organisation. Also, operations managers optimise operational abilities using data and engineering.
Using data for decision-making
With the evolving business scenario, it is important to make business decisions based on data-driven analysis. Data analysis along with the traditional techniques of history, employee and customer behaviour can be helpful.
Using operations management for processes
The use of operations management methods like BPR and BPA for business processes. BPR aids in reducing operational costs, increasing production capacity and service capabilities. BPA can increase efficiency, save time and money, reduce errors and increase transparency.
Difference between business and operations management
Business and operations management are two different things. While the former focuses on long-term planning, the latter concentrates on daily activities. Operations management oversees functions like scheduling staff, making payroll, receiving and processing payments, organising equipment and supplies. On the other hand, business management focuses on making strategies for future results. This needs extensive knowledge and includes external factors.
Operations management is vital for the functioning of the business. It is the process of developing and employing business practices to achieve maximum efficiency. The success of operational management depends on balancing the use of resources for production, including labour, raw materials, budget and technology. This lowers production costs and increases revenue. Organisations need to comply with the operations management principles and the right tools to achieve operational excellence.
