5 min read
Nov 04, 2019

What is Operations Management?

Want to improve your business’ effectiveness and efficiency? Take a closer look at your operations.

Victoria WilsonSpecialist Analyst

Operations management involves planning, implementing, and supervising the production of goods or services. Businesses must manage and allocate resources, which could include labor, equipment, and vehicles, among others, to ensure the delivery of the final product.

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What does operations management entail?

As a business function, operations management is applicable to a broad range of industries—including retail, supply chain, and logistics to name a few—and therefore specific job functions vary accordingly. Still, there are many commonalities even when the final product differs. Most operations management business divisions are characterized by the following:

Processes: Producing goods and services require well-established, scalable steps to fulfill deliveries successfully.

Planning: As inputs, context, and conditions change, managers must be able to make adjustments accordingly. Planning requires anticipating changes and optimizing processes continuously.

Efficiency: Businesses need to ensure processes run optimally with just the right allocation of resources, reducing down time and avoiding/fixing bottlenecks.

Cost management: Keeping costs low without risking quality is essential to delivering a profit, and production is a costly portion of a business' operations.

Quality control: Implementing checks on the quality of the business' product can help ensure a steady reputation and continued customer satisfaction.

Technology: Using the right technology for each step in the product development and delivery process can offer gains in efficiency, quality, and consistency.

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Common strategies

In addition to the daily responsibilities of managing production, those in operations are also responsible for developing strategy. These are some of the most commonly addressed points in operations management:

Data collection and analysisData is crucial to measuring the efficiency and effectiveness of the business processes: It's at the center of planning efforts and decision making. With the use of data however, come a number of challenges—including unifying, standardizing, and cleaning data, often making it an area with potential for improvement.

Inventory optimization: ABC analyses are often used when managing supply chains. The method classifies inventory by value, with A being the most valuable, and C the least valuable. This analysis is based on the Pareto principle, according to which most of the consumption value comes from a small portion of items. This approach improves efficiency by focusing on the most valuable items.

Process design: Establishing sound processes for each part of your business' operations from the beginning ensures fewer obstacles later on. This effort should involve research, expertise, and some foresight to provide measurable impacts.

Communication protocols: Your business' operations only flourish when departments collaborate consistently. Those involved in operations management must work closely with finance, HR, sales, and marketing, so establishing points and channels of communication, as well as escalation methods will be essential.

Forecasting and goal setting: Forecasts will impact planning, budgeting, process design and inventory. With the use of data, businesses can improve their forecasting and so yield goals that are aspirational, yet attainable.

Managing people: For all the talk about innovation and technology, people are still an important component of operations management. Strategies to improve job satisfaction include providing training, listening and acting on employee feedback, and fostering a collaborative environment.

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Trends in operations management

Automation: Automating operational processes throughout your business can lead to significant efficiency gains. Online scheduling, automated notifications, and automated workflows all free up employee time and improve the speed and quality of customer experience. With an increasing demand for customized products and services, this automation will be necessary to divert resources toward related tasks.

Digital internal communication: Internal communication has gained attention for its multifaceted benefits. Employees can more easily communicate, even while on the road or in a remote location.

Lean operations: Running a lean operation means focusing on customer experience while minimizing resource use. Lean operations focus on reducing waste to improve efficiency. In manufacturing, for example, lean operations means determining the value added of each process, and keeping a manufacturing schedule based on customer orders, rather than arbitrary deadlines.

Sustainability: Changing laws and heightened customer awareness are especially driving changes in supply chain and logistics. Reducing emissions, decreasing use of natural resources, and eliminating redundancies are common areas of interest for businesses looking to improve their operations' sustainability.

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Operations management software helps streamline your business operations

As businesses focus on running agile and efficient operations they are increasingly turning to automation and data to help smooth out processes and make better decisions. Operations management software helps businesses achieve their goals by streamlining processes, digitizing documents, and automating workflow.

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Interested in operations management software?

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