Operations management is the administration of business practices to create the highest level of efficiency possible within an organization. It deals with converting materials and labour into goods and services as efficiently as possible to maximize the profit of an organization. It involves efficient utilization of resources from staff, materials, equipment, and technology to generate maximum profit for the organization, and managers in the operations unit acquire, develop, and deliver goods to clients based on client needs and the abilities of the company. Teams in charge of operations management strive to produce the maximum net operational profit by balancing costs and revenues.
Operations management handles various strategic issues, including determining the size of manufacturing plants and project management methods as well as implementing the structure of information technology networks. It also manages issues around the management of inventory levels, including work-in-process levels and raw materials acquisition, quality control, materials handling, and maintenance policies.
The research of Robert S. Kaplan and David P. Norton suggests that every business operates along four basic focus dimensions: finance, customers, internal processes, and learning and innovation.
The heart of the financial dimension for most businesses is profit, both short and long-term goals are targeted at maximizing profit. In some cases, short-term financial goals might entail sacrificing current profits to increase future capacity. Managers must control the flow of money through the organization to ensure short-term goals align with long-term goals.
Customers are the foundation of any business. Without the flow of their money through the organization, the business will suffer. Managers aim to maximize the flow of customer money and target customers who have different needs and whose needs the business has the capacity to satisfy. This is necessary as meeting those needs is vital to their profitability.
Optimization of internal processes leads to greater profitability and customer satisfaction. The business processes need to be straightforward and synchronized across different units such that every unit delivers its output at the right quality and time to meet overall quality and timeline. Fine-tuning the process to make it maximally efficient, keeps operating costs low and pleases customers, leading to greater profits.
Learning and Innovation:
A good manager stays abreast of technological shifts as well as anticipates and initiates change by encouraging her organization to focus on learning and innovation. Practically, this can mean anything from having a well-funded research-and-development team to paying for continuing education for employees. An organization that surmounts cognitive limitations stays one step ahead of its competitors.
Operations management is the heart of any organization and plays the following roles:
- Operations management oversees the complete operating system of an organization.
- It is essential for organizations to manage their daily activities seamlessly.
- Operations management controls all the processes and handles issues including design, operation, maintenance, and improvement of the systems. It also maintains smooth, effective, timely production of products and services even when unexpected situations arise.
- An organization’s capacity to fulfill its growth and stability objectives is positively impacted by operations management since it contributes to enhancing the organization’s reputation.
- It ensures that products meet the quality standards and customers’ expectations. Thus, satisfied customers also mean customers buy from you again and referrals, which further improves brand value, giving a competitive edge in the market.
- Recognizing and optimizing the processes included in the production of services or goods, which can help cut costs, is achieved through operations management. Thus, operations management facilitates selling more products/services and reducing costs, thereby increasing revenues, and enhancing the growth of an organization.
As managers of our various businesses, we must appreciate the impact of operation management and apply its strategic principles in our daily business activities and fine-tune our processes to make them maximally efficient, keeps operating costs low, and pleases customers, in other to maximize profit and enhance business sustainability.