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Operations Management: Purpose, Goals, Importance

Operations management impacts every aspect of company operations — production, monitoring and improvement, and its contribution to overall profitability. It propels the effectiveness of workforces, processes, and supply chains.

What is Operations Management?

Operations management involves managing daily business operations in an effective manner to enhance profitability. This field concentrates on devising strategies and implementing measures to optimise both production and supply chain efficiency.

Purpose

Operations management aims to facilitate and bolster streamlined business procedures, concentrating on staff, processes and physical resources for business operation.

Furthermore, operations management pertains to an organisation’s management and supervision of information flow among its departments; how it meets business and regulatory standards; its commitment to ensuring customer satisfaction; its handling of day-to-day operations; and addressing occasional issues.

Goals

The goals of operations management revolve around optimising the efforts of an organisation, primarily on the production of goods and/or services, and overseeing the supply chain and infrastructure. The emphasis lies in managing expenses, enhancing profitability, and effectively distributing resources.

Operations managers aim to diminish operational expenses by coordinating business activities, ensuring qualified employees, and consistently overseeing performance metrics.

Importance

Implementing efficient operations management practices enhances a business’s competitiveness and safeguards it against investing time and resources in endeavours that do not align with the company’s strategic vision. A proficient operations manager plays a vital role in ensuring the organisation attains its business objectives.

In every industry, operations management is crucial for companies to maintain competitiveness, especially in healthcare, technology, and manufacturing. Inadequate operations management can jeopardise essential business functions such as research, client service delivery, IT operations, and inventory control.

Types of Operations Management

The following types of operations management may be implemented depending on the structure and nature of the organisation.

  • Objectives management revolves around setting and achieving operational objectives with broader organisational goals for coherent outcomes.
  • Task management covers organisation and managing tasks within operations, ensuring smooth workflow and timely completion.
  • Individual supervision involves overseeing individual performances to identify strengths, address weaknesses, and optimise productivity within the workforce. In many ways, this can involve real-time performance monitoring of each employee – but careful accounting may be needed as this model may be often confused with micromanagement.

Certain aspects of operations management might need other functions. For instance, responsibilities might consist of activities such as strategising and conducting research, creating operational budgets, and overseeing physical inventory, supply chains, and vendors.

Categories of Modern Operations Management Environments

  • Centralised. Shops employing centralised operations management usually has a single central control system to oversee supply chain operations and supervise numerous employees operating within a single location.
  • Decentralised. Decentralised operations management employs various systems, such as advanced infrastructure and technology such as web applications and cloud databases, to coordinate tasks across global supply chains and multiple sites.
  • Hybrid. A hybrid operations management setup harnesses the benefits of both centralised and decentralised operations. This could involve a centralised production hub integrating unified manufacturing and warehousing functions, alongside an automated infrastructure linked to cloud-based networks for real-time monitoring.

Strategic vs. Tactical Operations Management Decisions

  • Strategic. These decisions involve long-term planning and goal-setting, shaping the direction of the organisation’s operations. The planning will account for certain factors observed on the ground and adjust the master roadmap accordingly based on further analysis.
  • Tactical. These decisions focus on day-to-day operations and may also be influenced by on-the-spot circumstances, such as the sudden absence of an employee with critical roles, forcing the supervisor and operations manager to delegate the employee’s tasks for the day amongst other people on the team.

Business Management vs. Operations Management

Businesses often combine business and operations management practices, yet they are also different. Business management emphasises long-term planning, contrasting with operations management, which prioritises daily tasks.

Operations management

Operations management refers to overseeing the daily activities within a business, encompassing responsibilities like staff scheduling, payroll management, payment processing, equipment organisation, and more.

Business management

Business management centres on long-term plans and strategy for future outcomes. It requires comprehensive general knowledge and integrates external influences.

Operations and Supply Chain Management

Operations management stands as a crucial element for companies reliant on logistics and supply chain functionality. This practice serves to safeguard supply chain operations, enhance productivity, and curtail expenses.

In corporations navigating intricate supply chains, operations management serves as a framework facilitating technology, tools, and tailored activities, ensuring an uninterrupted flow of materials and finished products. It helps managers to allocate resources toward achieving objectives. Operations managers heavily depend on robust logistics and supply chain management.

An effective operations management develops procedures and systems to oversee and gauge supply chain activities. For instance, when customers cancel orders or return items to the warehouse, the operations management team shoulders the responsibility of implementing protocols to minimise administrative overhead, adjust production levels, and/or optimise the resale value of such items.

Operations management is involved in every facet of critical work, particularly in the supply chain, guaranteeing adherence to key performance indicators (KPIs). Managers use these KPIs to make informed decisions and coordinate efforts across the supply chain and the entire organisation.

Operations Management Process

The operations management process is a cyclical and iterative framework essential for achieving operational excellence within an organisation.

  • Implementation is where meticulously crafted plans and strategies are translated into action, with guidelines for allocating resources, setting up schedules, and executing tasks according to predefined blueprints. Resource allocation involves assigning personnel, materials, technology, and finances where they are most needed.
  • Optimisation is the ongoing enhancement within operations. It’s a continuous effort to streamline processes further, aiming to improve efficiency, quality, and usage of resources by evaluating all parts of the workflow and identifying potential areas of improvement.
  • Improvement is where operations management responds to external and internal changes, which can involve fostering innovation, staying competitive, and being proactive in anticipating and adapting to shifts in the business environment.  

Role of an Operations Manager

The primary function of operations management is to optimise outcomes while minimising expenses. A proficient operations manager directs a company’s resources toward accomplishing objectives and upholding benchmarks.

Most companies maintain an operations department to fulfil this purpose, although the precise responsibilities can differ between companies and industries. An operations manager’s duties encompass guiding overall company operations, financial strategy, and allocating resources for specific projects and services.

Generally, operations managers oversee the day-to-day activities of their companies, ensuring that the workforce adheres to company policies, standards, as well as pertinent laws and regulations. Their main tasks involve supervising daily business operations, analysing procedures, and generating operational and financial reports. Furthermore, these managers gauge the impact of business operations by gathering, processing, and communicating operational KPIs.

Efficient operations management demands a comprehensive understanding of the business, including resource allocation, review of documentation, quality management, coordination, dissemination of information across departments, and taking appropriate actions as necessary. Operations managers typically possess a broad, cross-departmental perspective, execute assigned duties from leadership, ensure resource efficiency, and assist in planning and preparing to achieve future objectives. Day-to-day operational management involves maintaining records and operational reporting.

Depending on a company’s size and scale, operations managers might assume additional roles in business development or marketing. For instance, operations management teams may comprise financial analysts, sales leaders, software developers, and IT support. This practice commonly involves coordinating across various departments and units.

Best Practices for Operations Management

  • Technology utilisation involves harnessing the power of cutting-edge technologies such as automation, artificial intelligence (AI), and data analytics. Automation streamlines repetitive tasks, reducing errors and enhancing efficiency. AI can analyse complex data sets to help suggest process improvements and data analytics pores over  large volumes of data to guide businesses with better decision-making and strategic planning.
  • Data-Driven decision making leverages data analytics tools and methodologies, in which organisations can make informed decisions based on concrete evidence. Analysing historical trends, customer behaviour, market fluctuations, and internal performance metrics helps businesses to optimise operations and predict future trends.
  • Integration with business processes is essential for ensuring coherence and synergy within an organisation. When operations are integrated seamlessly with other functional areas like marketing, finance, and human resources, it fosters a unified approach towards achieving objectives.

Challenges in Operations Management

Navigating the landscape of operations management comes with several significant challenges that businesses encounter in their pursuit of efficiency and growth.

  • Business dynamics encompasses the need to adapt swiftly to market fluctuations, ever-changing consumer preferences, and intense competitive pressures. This challenge demands a delicate balance between maintaining operational efficiency while responding effectively to dynamic market conditions.
  • Global operations pose a unique set of challenges, managing operations across diverse geographical locations. This involves addressing cultural differences, logistical complexities, varying regulations, and adapting strategies to suit different markets, all while ensuring consistent quality and efficiency.
  • Embracing advanced technology is crucial to staying competitive and efficient. However, integrating new tech into existing operations while ensuring the workforce is adept at utilising these tools poses a challenge.
  • Time management must be balanced to meet the need for timely delivery with maintaining high-quality standards. Meeting deadlines without compromising on quality is a constant challenge, especially in dynamic and demanding environments.
  • Changing regulations and limited resources present a challenge for operations managers, pushing them to discover sustainable business practices that consider future operational landscapes. 

DISCLAIMER: This article is for informational purposes only and is not meant as official corporate advice. BARTERCARD has no business relationships with any company.

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