Last updated: What is operations management? Definition, types, examples

What is operations management? Definition, types, examples


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Effective operations management is core to business success, but traditionally has run in the background without a lot of fanfare. That’s not the case these days.

Ongoing disruption to the global supply chain and the growing need for business agility have put the spotlight squarely on operations managers.

Companies are reexamining and rethinking their processes to improve efficiency so they can navigate constant change and put their business on solid footing. They’re leaning on operations managers to get it right.

Every business, no matter the size or industry, needs effective operations management to drive profitability, achieve long-term success, and win competitive advantage.

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What is operations management?

Operations management is the planning, organizing, and oversight of business practices that maximize efficiency and assure company processes are driving value. It involves preparing and supervising the practices that turn resources such as labor, equipment, and raw materials into goods and services.

Operations managers work to ensure a company achieves the highest operating profit by carefully balancing cost and revenue. They work closely with other teams to increase productivity, deliver high-quality products and services, and ensure customers are satisfied.

Large organizations usually have a chief operations officer (COO) while smaller businesses might assign the duties to another high-level role. Either way, it’s a highly strategic position involving strong planning, organizational, and communication skills.

Operations management is closely associated with supply chain management: Managing the process of sourcing material, turning it into product, and delivering it to customers.

What are types of operations management?

There are many types, or aspects, of operations management. An operations manager role can vary widely, depending on business size and industry. They might have a broad range of responsibilities or focus on one area.

  1. Product design and development
  2. Planning and management of manufacturing facilities
  3. Purchasing/procurement
  4. Forecasting
  5. Capacity planning
  6. Inventory management
  7. Quality control
  8. Delivery to customers

infographic with icons representing 8 types of operations management or operations management functions

Functions related to managing operations also can be broken down as strategic or tactical; the tactical functions carry out the overarching strategies or goals.

Examples of managing business operations

Given that every business needs to operations management to function, there are many examples across industries. Moreover, every industry can have a wide range of operations functions.

Here are a few examples:
  • Healthcare – An operations manager of a healthcare facility is generally responsible for ensuring efficiency in delivery of high-quality care. That can include overseeing administrative costs, managing claims and billing, and legal compliance.
  • Manufacturing – A company that makes home appliances, for example, has processes for sourcing materials, managing factories, maintenance, overseeing inventory, and ensuring quality.
  • Restaurant – An operations manager for a restaurant or chain of restaurants is usually responsible for facility maintenance, employee training and supervision, financial planning, inventory management, compliance, and payroll.
  • Retail – In an industry that can span multiple environments, from brick-and-mortar to e-commerce and single stores to chains, retail operations can encompass many functions, including sourcing, inventory, staffing, logistics, store management, and customer service.
  • Transportation – Operations management for a transportation company includes overseeing vehicle maintenance, fuel supply, routing, staffing, and communication, among other functions.

Supply chain management and business operation managers: The difference

In smaller companies, an operation manager’s responsibilities may include supply chain functions like managing the processes and systems for sourcing and delivery.

Supply chain managers work with suppliers to collect materials, oversee manufacturing of product, and delivery to customers. They evaluate suppliers and negotiate contracts, assess supply chain risks, manage purchasing, and oversee logistics. By comparison, operations managers may be focused more on internal production processes.

Strong supply chain management is critical for increasing efficiency, reducing costs, improving customer satisfaction, and driving revenue for a company.

Supply chain challenges can make for a wild ride. Get advice, best practices, + predictions from top experts HERE.

Best practices for managing operations

There’s no one-size-fits all solution for operations management. Every business will manage their operations differently depending on their unique needs and goals, but there are a few foundational best practices that apply across industries.

  • Leverage automation. Advanced technologies such as modern ERP systems automate processes to reduce manual work and the risk of human error. They apply artificial intelligence and data analytics to provide deep insight that gives organizations the visibility they need to boost efficiency and sharpen decision making.
  • Remain agile. Operations managers may get comfortable with certain ways of doing things, but they need to be ready to shift gears to accommodate the change that’s always inevitable. Cloud-based systems help organizations remain agile by making it easy for them to alter their processes and innovate.
  • Keep people at the center. As they explore ways to boost efficiency through new technologies, organizations can’t lose sight of their people. For technology to be truly effective, operations managers must consider the experience of the end user. Tech implemented for tech’s sake will have limited value. Only by aligning people, processes and technology can they help grow and improve the business.

How operations management impacts customer experience

The way a business manages its processes is directly linked to the customer experience it provides.

When a company delivers quality products and services to customers in a timely manner, customer satisfaction soars. In contrast, a delayed or wrong order will damage CX and drive customers to the competition.

Customers want their wishes met, on time and at a good price. They expect brands to live up to their promises and deliver products as advertised. This requires understanding what customers want and need, and using that to inform operations management. Listen to their feedback to adjust processes as needed.

Customer experience isn’t just about front-end touch points; it requires integration with back-end operations such as inventory and fulfillment in order to really shine.

According to a McKinsey report, companies can spot operational improvements that will improve CX by analyzing customer journeys. For example, one bank looked at how customer satisfaction was impacted by how long it took to apply for an account and receive an account card.

Understanding breaking points can help businesses zero in on operational improvements that will boost CX, researchers said. Implementing those improvements could involve advanced analytics, intelligent process automation, and/or a lean approach.

Operational excellence, bottom-line benefits

Satisfied customers prove that your operations and processes are doing what they’re supposed to: deliver value.

Effective operations management has become more vital than ever as market conditions continue to churn in the wake of the pandemic.

Only with the best planning and oversight of its myriad processes can a business remain resilient, achieve its long-term goals, and outlast the competition.

With intelligent ERP, the possibilities are endless.
The journey begins HERE.

Frequently asked questions (FAQs):

Business management covers a broad area of business encompassing all aspects of overseeing and business operations. It involves strategic decision-making at a higher level, focusing on long-term goals and overall company direction. This includes tasks like setting business objectives, developing strategic plans, managing company resources, and making decisions that affect the entire organization.

Operations management, on the other hand, is more specialized and focuses on ensuring that the day-to-day activities within a company are conducted in the most efficient way possible. It involves the planning, organizing, and oversight of various business practices with a focus on maximizing efficiency and ensuring that company processes are effective in driving value. This field is particularly concerned with the preparation and supervision of practices that transform resources — like labor, equipment, and raw materials — into finished goods and services.

Strategic decisions in operations management are about setting long-term goals and determining the overall direction for the operational activities of a company. These decisions are broad in scope and have a lasting impact on the organization. They involve high-level planning and are focused on aligning the operations with the overall business strategy. This includes decisions like choosing the location of new manufacturing facilities, deciding on major investments in technology, or developing new product lines.

Tactical decisions, in contrast, are more focused on the short-term and concern the implementation of strategies set by strategic decisions. These decisions are more specific and detail-oriented, often concerning the day-to-day management of operational activities. Tactical decisions include things like scheduling workforce, managing inventory levels, quality control processes, and responding to immediate operational challenges.

Project management and operations management are two distinct areas within a business, each with its unique focus. Project management is centered on specific, temporary initiatives within a business. These projects, characterized by clear start and end points, aim to achieve particular goals, such as developing a new product, constructing a building, or implementing a new business strategy. The essence of project management lies in planning, executing, and closing these projects, guiding teams to meet objectives within a set timeframe. In contrast, operations management deals with the ongoing, day-to-day activities that are fundamental to a business. Unlike the temporary nature of projects, operations are continuous and repetitive, forming the backbone of a business’ efforts to produce goods or provide services. This area involves managing regular processes, ensuring quality, overseeing supply chains, and handling inventory, all with the goal of maintaining efficiency and effectiveness in alignment with the business’ long-term strategic goals.

Operations management is vital in making sure the entire supply chain works well from start to finish ensuring the efficient and effective production and delivery of products. It involves managing day-to-day activities like production, inventory, and quality control, which are essential for keeping the supply chain running smoothly. Good operations management means products are made and delivered correctly and on time, which is key to satisfying customers and keeping costs down.

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