Operations management influences every part of the organization.
How are processes run?
How products or services are produced?
How to track and improve process efficiencies?
Operations management touches upon all of these aspects of running a business. Driving efficient workforces, processes, and supply chains requires efficient management of business operations. This blog explores what operations management is, why it is important for the business, and the best practices in operations management.
What is Operations Management?
Operations management is the administration of business structure, practices, and processes to enhance business efficiency and maximize profits. The management of functions that a business needs to run efficiently daily is covered by operations management. Common types of business operations that come under operations management include –
- Overseeing multiple departments and aligning their operations to business goals
- Overseeing and streamlining processes
- Balancing expenses and revenue
- Developing strategic plans
- Managing production, logistics, and supply chain
A streamlined operations management process helps create the highest level of efficiency possible within the organization. The process focuses on converting materials and labor into goods and services in the most efficient manner for maximizing revenue generation.
Operations management teams work towards balancing costs with revenue so that the highest net operating profit is achieved. Some of the functions performed by the operations department are supply chain management, product design, forecasting, quality control, and delivery management.
Operations management is the development and execution of business strategies that help achieve maximum flow of information and productivity. Operations management is not the same as project management. The former deals with ongoing day-to-day oversight of organizational activities and processes, while the latter deals with step-by-step management of projects from beginning to end. Operations management requires constant analysis to determine what is working and what is not.
The key factors in operations management are –
Cost – Managing costs of production, labor, and other operational expenses that keep prices at acceptable levels while profits are still being made.
Quality – Delivering services or goods of the highest quality, and also improving product quality.
Speed – Delivering products or services in a timely manner and determining ways to make the process faster while maintaining quality and costs.
Flexibility – Keeping up with changes in the market and pivoting quickly to match competition that develops a faster process.
Businesses of all sizes across industries, constantly strive to optimize their operations, streamline processes, and deliver top-notch customer experiences. Given the exponential rate at which digitization takes over business operations, the field of operations management is undergoing a significant transformation.
Understanding the Operations Management Process
A clear understanding of operations management is a must for streamlining the operations management process. Operations managers are in charge of acquiring, developing, and delivering goods to clients based on the client’s requirements and the abilities of the company.
Operations management handles strategic issues that include determining the size of the manufacturing plant, and project management methods, and implementing the structure of information technology networks. Other operational issues include the management of inventory levels, which include work-in-progress levels and raw materials acquisition, quality control, materials handling, and maintenance policies.
Operations management also involves the study of raw materials and ensuring that minimal waste occurs. Operations managers use several formulas to determine when and how large an inventory order to process and how much to hold in hand. The operations manager must recognize the importance of understanding and coordinating the work in the company.
With a structured operations management process, you can –
1. Handle daily activities seamlessly
Operations management oversees and coordinates an organization’s operating system, which minimizes disruptions, reduces downtime, and maximizes productivity. Seamless operations management maintains a competitive edge by meeting deadlines and delivering goods or services on time.
2. Handle issues and unexpected situations
The operations team addresses any issues in production and finds solutions to minimize their impact. Moreover, it ensures smooth operations, even during unforeseen events.
3. Beat competition
A seamless operations management process empowers organizations to achieve agility, responsiveness, and adaptability by efficiently managing resources and continually improving processes. Continuous process improvement allows teams and organizations to stay ahead of the competition and achieve long-term success in the process.
4. Improve customer satisfaction
The main focus of operations management is quality control, efficient production, and timely delivery. When this is achieved, customer satisfaction improves considerably brings in more positive referrals, and builds a strong reputation.
5. Boosts reputation and growth
Operations management consistently delivers superior products and services, which helps build a positive market reputation, attracts customers, and enhances the trust in the brand. This further fuels growth opportunities for organizational goals.
6. Reduces costs
Operations management streamlines operations, eliminates waste, and optimizes the allocation of resources to reduce costs. All this is done while maintaining the quality of the product.
7. Increases revenue generation
When resource utilization is optimized and operations are streamlined, production levels are increased and delivery timelines are met adequately, which in turn enhances revenue generation.
8. Boosts employee motivation and productivity
A well-planned operations management process provides clarity on the roles responsibilities, and goals. Streamlined operations management also fosters a supportive work environment and teamwork. Growth opportunities also motivate employees, which increases productivity and commitment to organizational objectives.
Core Principles in Operations Management
The key principles of change management can guide manufacturing and operations management professionals through the operations management lifecycle. Let us examine the key principles of operations management.
Success – Striving for customer satisfaction and achieving organizational goals drive business success by providing a roadmap for improving performance and ensuring customer loyalty.
Reality – Understanding the current state of operations enables decision-makers to make informed decisions and implement improvement strategies. The focus is on the bigger picture rather than on individual tools and techniques.
Change – Embracing and managing change effectively enables organizations to adapt to market dynamics. Adapting to change also ensures efficiency, growth, and long-term operational stability.
Fundamentals – Adhering to core operational principles and optimizing practices ensures efficient operations, sustained productivity, and profitability.
Organization – Operations management enables effective production planning and control for seamless interconnectivity, predictability, and consistency across elements. This in turn contributes to profitability and operational management.
Humility – It is important to recognize the limitations of efficient resource utilization, and avoid costly trial-and-error processes, and maximize time and cost savings.
Accountability – An operations management process holds individuals and teams accountable for their roles and performance, which promotes ownership and drives excellence.
Managed passion – Nurturing employee enthusiasm and commitment enhances overall productivity and performance.
Causality – Understanding the cause-and-effect relationships through data-driven approaches helps in effective problem-solving and continuous improvement. This is further achieved by identifying and eliminating underlying issues.
Variance – Managing and reducing variance in processes improves operational efficiency, consistency, quality, and customer satisfaction while reducing waste.
Functions in Operations Management
Operations management is a multi-tiered approach to managing a business. Operations management is a field of business that manages the operations of a business to ensure the efficient execution of projects and optimal utilization of resources. The 4 common functions of operations management are listed below –
Strategy – While developing the operations strategy, you need to spend significant time analyzing data and information to determine effective ways to reach your objectives. Several factors need to be considered while designing the strategy. The size of the workforce, budget, supply chain configuration, and timeline are some of the factors that should be considered while designing the strategy.
Designing the strategy involves –
Analysis of data – Identifying the underlying principles, reasons, or facts by breaking them into separate parts.
Estimation of quantifiable characteristics – All the quantifiable characteristics of products, events, or information, such as sizes, distances, and quantities must be estimated.
Planning or directing activities – Activities like sales promotions require coordination with other department managers.
Developing or implementing product marketing strategies like advertising campaigns or sales promotions.
Forecasting
Predicting the financial future of the organization involves knowing how much money you have to work with in the present, and how much you hope to earn from the sale of the product. Other environmental factors like inflation, consumer demand, and technology upgrades also impact your budget and earnings in the future. Reviewing financial statements and other performance data helps measure productivity and goal achievement. Directing or coordinating financial or budget activities to fund operations is also part of the forecasting process.
Supply chain management
Supply chain management is very similar to operations management. Both these processes involve overseeing processes within the organization. Operations management exists at a higher level viewing the company holistically and looking for efficiencies. Operations management is intimately involved in supply chain management decisions. Directing and coordinating activities of businesses or departments concerned with the production, pricing, sales, or distribution of products.
Quality control
The main focus of operations management is searching for efficiencies and the fastest, safest, and most cost-effective ways to serve customers. Quality control is key to determining if your business processes are efficient. Operations management is concerned with quality control.
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Types of Operations Management
The 3 main types of operations management focus on the objective, the task, or the individual employee. The type of operations management you use depends on the company’s needs and goals.
Objectives management – Setting priorities or making operational decisions is based on business goals, and aligning operations to support overall company objectives.
Task management – Managing daily operations based on work in progress and linear workflows to assign tasks before moving to the next phase.
Individual supervision – Using real-time information derived from managers and employees on the ground performing the tasks for optimizing operations.
Some aspects of operations management may require advanced functions. For instance, tasks may require planning and researching, creating operational budgets, and managing physical inventory, which may require beyond basic operations. Modern operations management can be categorized into centralized, decentralized, and hybrid.
The centralized model typically uses one central control system to manage essential supply chain functions and oversee multiple employees working in a single location. The decentralized model of operations management uses multiple systems, including advanced infrastructure and technology to coordinate work across global supply chains and multiple locations. This includes advanced infrastructure and technology like web applications and cloud databases for coordinating work across global supply chains across multiple locations.
The hybrid operations management environment leverages the advantages of centralized and decentralized operations. For instance, you could have a centralized production center with unified manufacturing and warehousing capabilities and equipped with automated infrastructure that is connected via cloud databases.
Skills Required in Operations Management
Unlike the marketing or finance departments, where the manager is in charge of his department alone, the operations manager plays a cross-departmental role with an array of responsibilities. The following skills are required to manage operations –
1. Organizational abilities
Organizational abilities refer to the ability of the operations manager to focus on different projects simultaneously without getting distracted by multiple processes. The operations team must be able to plan, execute, and monitor each project to the end without losing focus. Without a proper structure of operations, there would be a pile-up of incomplete tasks, important documents may get lost or damaged, and a majority of time will be spent on finding the lost documents. Organizational skills are a must in the operations management department.
2. Coordination
Strong coordination skills are a must in the operations management department. Coordination skills are required to integrate resources, activities, and time to ensure proper use of resources towards the achievement of organizational goals. Carrying out specific activities simultaneously and switching between activities/tasks with ease requires ace coordination skills. Strong coordination abilities help deal with interruptions, obstacles, and crises, efficiently without interrupting normal routine.
3. Communication skills
Most of the responsibilities of the operations team revolve around seamless communication with people. The operations team must know how to relate with employees, external stakeholders, and other members of senior management. An operations manager must know how to manage the fine lines with other colleagues by knowing how to listen and communicate. The manager must be able to communicate with them at professional and personal levels. Most workplace environments are made up of people from diverse cultures. The operations managers need to show tolerance and understanding to people from varied backgrounds.
4. Tech utilization
In the age of rapidly advancing technologies, an operations manager is expected to have an affinity for tech usage. The manager must be in a position to design processes that are efficient and tech-compliant. Gaining a competitive edge in the market requires a tech-savvy operations management team.
5. Complex problem-solving
Since operations management requires coordination between multiple departments, issues will arise due to the friction between departments. Problem-solving capabilities help tide through any crisis that may arise during business operations.
Why is Operations Management Needed to Run a Business
Operations management is important in a business organization because it aids in effective management, control, and supervision of goods, services, and people. The operations management process works as the core of any business. Here are different ways in which operations management plays an important role in any business –
- Organizations require operations management to run their day-to-day operations smoothly
- Operations management oversees all the processes and deals handled by the business. This may concern system operations, design, maintenance, and improvement, and also ensures that products and services are produced smoothly on time. It also helps prepare for unexpected circumstances
- Operations management is important to build and maintain the organization’s reputation. This has a favorable impact on its capacity to achieve growth and stability goals. Having an operations management process ensures that products and services satisfy quality standards.
- Operations management also understands and refines processes to promote the sale of more products and services. All this happens while lowering costs, improving revenues, and increasing org growth.
- Operations management improves employee productivity by inspiring them to do their jobs.
With its cross-functional span, operations management cuts across sectors and industries. In the health sector, for instance, operations management facilitates proper health delivery with the right instruments at the right time. It also helps people like nurses and doctors deliver timely service. In the production and manufacturing sector, operations management ensures the in-time delivery of products and schedules the execution of tasks.
Benefits of Operations Management
1. Improves product quality
Operations management is the first unit in a typical firm that checks the durability and reliability of products. The quality of products or services is verified against the expectations that customers have. Delivering quality products consistently is the result of operations management.
2. Improves productivity
Productivity is defined as the ratio between the input to output in a production or manufacturing unit. Measuring productivity is the only way to verify employee input. Operations management ensures that appropriate staffing levels are maintained and maximum results are achieved. Effective operations management is key to high productivity.
3. Customer satisfaction
Achieving customer satisfaction is paramount for any business. Operations management rightly ensures that quality products are delivered, so that the highest levels of customer satisfaction are maintained.
4. Minimizes operational costs
When productivity, product/service quality, and customer satisfaction are improved by streamlining operations management, costs incurred on product servicing are reduced significantly. Reduces operational costs simultaneously leads to increased revenue, and also reduces waste.
Best Practices in Operations Management
Best practices in operations management workflow begin with adopting modern methods that aid in carrying out jobs more efficiently and delivering desirable products/services. The best practices in the operations management process vary in each company, and each company needs to evolve in tandem with changing priorities. Here are some effective ways to improve operations management –
Use of technology – As modern technology like workflow automation becomes more adaptable, it eliminates repetitive tasks. Modern operations managers can optimize operational capabilities with the help of data-led design and engineering.
Implement data-based decision-making – Modern ops management strategies focus on making sound business decisions based on data-driven analysis instead of relying on past results, employee and customer behavior, and personal biases.
Use operations management for process redesign – Operations management processes can be the basis for business process redesign (BPR) and business process automation projects.
Challenges in Operations Management
The challenges in operations management revolve around decision-making, time management, and resource allocation. Common challenges include –
Business dynamics – Operations managers juggle multiple business functions and make decisions that impact multiple departments.
Global ops – The global supply chain challenges operations management to stay updated on the latest global market trends and find operational efficiencies across operating environments.
Time management – The problems in operations management arise from several places, the most frequent challenge is inadequate time allocation due to factors like labor shortages.
Sustainability – Evolving industrial regulations and resource shortages are a huge challenge to operations managers to find sustainable business practice efficiencies that work well in future work environments.
Technological advances – As technology evolves at exponential rates, the technical complexity in the discipline of operations management also increases proportionally. Operations managers are therefore required to have significant technical and information management expertise. Not all operations managers are equipped with the technical expertise required to keep up with evolving tech needs at the organization.
Conclusion
Operations management impacts the way multiple departments function in an organization. You can redefine operations in your organization by automating the workflow. Cflow is a no-code workflow automation solution that provides powerful automation features to businesses.
No code automation means that you can build process workflows without having to write even a single line of code. Visual elements can be dragged and dropped to build operational workflows within minutes.
The real-time reporting and analytics feature in Cflow provides a bird’s eye view of the entire operations management process. Interested in exploring Cflow further?
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