Operations Management

Operations management is a business practice aimed at organizing and controlling processes within an organization to achieve maximum efficiency and avoid excessive losses and expenses. The main goal of operations management is to guarantee the highest possible profit for the organization by using the available resources fully, transform them into goods and services for the customers in the most efficient way, and make sure the products reach the customers in time and satisfy their needs. In other words, the key feature of operations management is keeping a balance between income and expenses, while obtaining the greatest possible operating profit.

How Operations Management works

As operations management implies control over the full cycle of production and distribution, it includes several fields of work, but it’s possible to highlight the main issues an operations manager works with. 

So, the main areas of responsibility of an operations manager are the following:

• strategic planning, including the determining of future production volumes and capacity development;
• inventory control and managing of supply chains;
• designing processes, controlling their execution and reorganization in case of need;
• designing products and their quality control;
• delivery management and processing feedback from customers.

Operations Management of inventory levels and supply 

Operations management includes many processes required to be designed and supervised. If observed in order of production, the first thing an operations manager should consider is inventory levels, as it’s critically important for sufficient and continuous production. It’s important to control both the inventory in current use and reserves of basic materials for further works, at the same time determining the needed amount to be adequate and without excess. Another important issue in that area is managing wastes, with constant check-ups that no extra wasting takes place and leftovers are being put into use whenever possible.

Supplying is one more significant issue for operations management. As production and distribution of goods and services is often a complex chain of interconnections, a proper operations manager is also skilled in logistics, having clear understanding how to organize processes without gaps in delivery chains. When providing the company with the production resources, operations management chooses the supplier by comparing prices, quality and delivery time, picking up the option which guarantees more efficiency.

While managing inventory, an operation manager is required to use analytics and a wide range of formulas to get the precise information on the resources the company possesses, and use those calculations to make scientifically based decisions on how much of the current supply should be used at the given moment.

Operations Management of internal processes

Another important field of work for an operations manager is studying, supervising and organizing of internal procedures of production inside the organization. To get the full picture, it’s essential for the manager to have a deep comprehension of how the company works. A qualified operations manager understands the goals of each process and how they are interconnected, thus being able to coordinate those processes and organize a smooth and uninterrupted cycle of production with the most efficient results possible.

Operations management deals with both strategic and tactical issues, having day-to-day procedures to be controlled and planning more distant activities. When supervising a process in the current run, an operations manager notes its stronger and weaker points to correct and possibly reorganize the process, with an intent to make it more efficient. 

As processes and operations differ greatly even within one company, it’s strongly recommended for a professional operations manager to constantly study trends, modern technologies and inventions to keep well-informed, sustain and enhance the company’s results over time. Many educational institutions around the world provide university degree programs in operations management, in which many important aspects such as legal issues of management, logistics, process management, planning and some others are thoroughly presented.

Modern theories of Operations Management

Considering all the abovementioned features of operations management, it’s safe to assume that it’s a complex subject, requiring individual approach in each case and a significant amount of knowledge in different spheres. Nowadays, there are several theories concerning operations management, attempting to classify knowledge in that area and approach the problem in an organized manner. One of those theories is lean manufacturing, which main idea lies in decreasing of waste, assuming that this is the key to efficient production. 

Another theory, Six Sigma, is based around the opinion that there are six main control limits, and by studying and controlling those limits using various tools it’s possible to achieve more productivity and efficiency.

Business Process Redesign, sometimes shortened to BPR, is another theory in operations management. It concentrates on analyzing business processes and their redesigning, suggesting that productivity might be enhanced by changing inefficient procedures. At this point, it shares similarities with one more theory, reconfigurable manufacturing system, which, in its turn, is based on the opinion that changing inner systems, hardware or software utilities might improve efficiency of production.