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The Beginners Guide to Operations Management

Businesses cannot function without the correct operations management. Therefore, good management of daily business operations is a critical component of reaching success. Conversely, failure to comply with the tenets of good management can have detrimental consequences such as low employee morale, a decrease in productivity, inability to pay supply chains, a decline in profitability, etc. These are scenarios that you do not want to happen to your business ventures. Thus, operations management plays a crucial role in business survival.

What Does Operations Management Mean?

The term operations management refers to the administration of the best business practices to achieve the maximum efficiency level when it comes to the disbursement of resources within a company. This includes the proper handling of materials, machinery, technology, and laborers to make high-quality goods and services beneficial for the company. These components must be managed well, from the strategic planning stage, implementation phase, supervision of the production, and final evaluation of outcomes for future innovations, for the company to remain profitable and competitive in the industry. Operations managers have the immense responsibility of dealing with strategizing, forecasting, and overseeing day-to-day processes. The field of operations management is cross-functional. It ties with many other branches like marketing, sales, human resources, and finance, and these have a significant bearing on business outcomes.

The Importance of Operations Management

It is not an exaggeration to state that everything about business hinges on operations management. It can plan, direct, and drive the manufacturing of goods and services. To compete in an ever-changing market, operations managers have to be efficient and productive to maximize profits, which is the primary element that determines a business’ survival. Operations management can influence customer service, product and service quality, proper functional methodologies, competitiveness in the market, technological advancements, and profitability. Failure to manage company operations will lead to detrimental results that can make a business fold.

Functions and Roles in Operations Management

A diverse set of functions and roles occur in the field of operations management. Most importantly, these functions and roles vary depending on the industry and the size of the business. Although some basic principles like striving for efficiency and productivity remain the same, there are differences in the details and execution. To illustrate, operations managers handling food and beverage have different roles from those dealing with car manufacturing. On top of that, specific procedures will vary if the business is a small start-up or a huge conglomerate.

There are many roles and functions such as managing projects, planning information systems, designing and developing products or services, tracking inventory through a supply chain, optimizing quality control, overseeing delivery to customers, maintaining facilities, forecasting for improvements, and more. Operations managers have the burden of carrying out these duties, so they need to be organized, analytical, resourceful, and skilled in dealing with people. In addition, now that technological advancements are rapidly changing the business landscape, managers have to adapt to make effective decisions.

Operations Management Strategies

Since operations managers are deeply involved in many roles and functions, they have developed several vital strategies and tactics to ensure the smooth execution of their obligations and responsibilities. Here are several main strategic and tactical methods that these operations managers rely on:

Leveraging Data: Savvy operations managers depend on quality, accurate, and reliable data for planning, strategic marketing, and decision making. Two common types of data analytics used are metrics on efficiency and effectiveness.

Controlling Data Challenges: At times, data can be compromised, making it difficult to compare. The task of securing data also rest on managers. Thankfully, newer systems and software make it so much easier to help managers go through the vast amounts of data generated daily in this techie world.

Analysis of Inventory: To effectively oversee and manage inventory in the supply chain, the Pareto research method is utilized. This is often referred to as ABC analysis because it divides the checklist into three categories. A has the most value and tightest controls, B has mid-level and reasonable controls, and C has the most negligible value and least need for control.

Designing Processes: Operations managers work hard in making the best research, the correct forecast, and the proper development of a sound process. This method takes a skilled operations manager’s energy and expertise, but the work infused and time consumed ensure lasting results.

Forecasting and Goal Setting: These are vital tools that propel a business forward. Setting goals give the company and its employees’ direction and motivation. Forecasting helps with the setting of expectations. Often, these require looking at historical data to help with the analysis of the forever-changing conditions. These tell managers if what they need to adapt and change to remain competitive in the industry.

Collaboration Amongst the Various Departments: Collaboration among the different departments is necessary so that the finance, sales, marketing, and human resources teams can all work together in harmony to better the company. Effective collaboration is made possible through good communication and the swift exchange of ideas from people that know how to cooperate.

Corporate Social Responsibility: Being responsible for the environment and the communities directly affected by the business are critical concerns that companies must take care of. This is especially true for the branch of manufacturing, which has legal repercussions.

Management of People: People or the employees and laborers will always be critical to the equation, despite the many advancements in technology and machinery. Managing employees is essential to business success because they are the backbone of many companies. Without these people, many daily operations will cease, and companies cannot produce quality goods and services.

Levels of Operations Management

There are three levels of management that an operations manager is concerned about. The manager can utilize them in the pursuit of company goals, and these are strategic, tactical, and operational plans. These three levels work with each other in the achievement of goals. Strategic plans are necessary to make the right tactical moves, which are crucial for hitting targets. These affect the daily operational level, which is responsible for scheduling, monitoring, controlling, and adjusting all the elements involved in producing goods and services. On top of these, the ranking of management working in operations has three levels: from low level, mid-level, and high-level operations managers.

Principles of Operations Management

The ten principles of operations management presented in the 2007 conference of the APICS (American Production and Inventory Control Society) were drafted by Randall Schaefer, in collaboration with Steven Melynk, Ph.d. and professor of Operations Management at Michigan stated University. These ten principles are what most operations managers use to achieve their business goals.

Reality: Different theories and techniques will not solve all your business problems. There is no universal solution to address the issues of your business.

Organization: All managers must organize all aspects of production into one coherent whole to help focus so that everything will be effective and efficient.

Fundamentals: Operations managers must know how to adhere to all the fundamentals because this is the basis of all successful production. Maintaining accurate inventory records, BOMs, and other general tasks are necessary for reaching the desired business outcomes.

Accountability: Everyone in the organization must be held accountable for everything that they do. When people know they are expected and responsible for their behavior, they try much harder.

Variance: Variance is part of every stage of business, so managers have to anticipate possible issues at every turn. This could involve improving workflow and ensuring total quality control to cut waste and increase profitability.

Causality: Since nothing is perfect in this world, problems will arise even with the best company efforts. Managers need to get to the root cause of the issues so that things will not escalate. This includes seeking client feedback and engaging in improvement efforts.

Managed Passion: It is vital to inspire people to work every day with vigor in their hearts. Passionate employees perform their jobs better, which can drive your company forward. This means investing in human resources, so they continue to stay motivated.

Humility: Nobody wants to be around an overbearing know-it-all, so it is essential to acknowledge that operations managers and the staff don’t know everything. This way, seminars, and plans can be conducted to learn and move in a unified way to achieve company goals.

Success: Managers need to define what they consider successful clearly, so everyone in the company will have parameters to work within the process of hitting targets.

Change: Nothing is constant in this world, so everyone must learn to adapt to the forever-growing market changes. This includes knowing the company’s customers, target clients, and what they want. It also involves understanding the competition and always maintaining the best practices and technologies to be one step ahead.

The Biggest Operations Management Challenges

Every day operations managers from around the world face continual challenges daily. These can be divided into five categories.

  1. The first is the issue of globalization because the world has become a global village with countries affecting and influencing trade.
  2. The second is the challenge of sustainability, whether products and services can withstand the test of time.
  3. The third is issues of ethical conduct because some are tempted to cut costs for the sake of profit.
  4. The fourth is ineffective communication which confuses.
  5. And finally, the challenges of a faulty system design are critical as it influences overall company performance.