Operations management is a field of business concerned with the administration of business practices to maximize the organization’s efficiency. It is involved with planning, overseeing, and organizing the processes within the organization to balance costs and revenues and achieve the highest operating profit.
What is Operations Management?
Operations management involves the planning, organization, and supervision of processes along with making business improvements to achieve higher profitability. Any adjustments to the day-to-day operations of the company need to be made with the end goal of supporting the company’s strategic goals, which often means that they need to be preceded with an in-depth analysis and measurement of current processes used.
Operations management was once known as production management, with the role having strong origins in manufacturing. It began with the division of production, and the role has been around since the times of ancient craftsmen. In the eighteenth century, with the concept of interchangeability of parts which sparked the industrial revolution, the role began to spread more widely.
Today, operations management has become a multidisciplinary functional area in an organization along with others such as marketing and finance. The role of the operations manager is to ensure that any inputs are used in the most efficient and effective ways possible to maximizes the output. To work as an operations manager, it is important to be familiar with a range of disciplines including general management, equipment maintenance, and factory management to name a few. Operations managers need to have a solid understanding of basic materials planning, common strategic policies, production systems, manufacturing, cost control principles and more.
Operations Management Responsibilities
The operations manager works in a field of business that involves managing the company’s operations in a way that maximum efficiency is ensured in project execution. It puts the individual in charge of the department in a role where they will need to be able to perform a range of strategic functions, which you can learn more about with a masters in operations management from Kettering University. Some of the main functions that an operations manager is likely expected to perform include:
Product design refers to creating a product to be sold to the end consumer. This involves either expanding on current ideas or generating new ideas in a process that leads to new products being produced. The responsibility of the operations manager is to make sure that the products that are designed and developed by the business meet customer needs and are in line with current market trends. This requires an awareness of the fact that consumers tend to be more concerned with the quality of the product than the quantity, and businesses need to create systems to make sure that any products produced meet customer needs as a priority.
Supply Chain Management
Supply chain management refers to management of the production process, starting from raw materials all the way to the completed product. It controls everything from the production to distribution, shipping, and delivery of the products. Operations managers are in charge of supply chain management with tasks such as maintaining control of inventory management, distribution, production process, sales, and sourcing supplier to ensure that the required goods can be supplied at reasonable prices. A supply chain process that is managed correctly will lead to a more efficient production process, reduced overhead costs, and products that are delivered to customers on time.
Forecasting is a process that involves predicting events that may occur in the future based on data gathered in the path. For example, the operations manager is required to predict the consumer demand for the company’s products or services, based on past data. They will rely on both past and present data on the demand for and uptake of the company’s products to determine what future consumption trends are likely to look like.
Operations managers tend to be the professional in charge of delivery management. They will ensure that goods are delivered to customers on time and are responsible for following up with the consumers to ensure that goods delivered are what were ordered and that functionality needs are met. When a customer is not satisfied with the product or a complaint has been made about certain product features, the operations manager is likely to be the first to receive the feedback before forwarding it to the relevant department.
Operations Management Ideal Skills
Unlike other departments like finance or marketing where managers are responsible for their own departments, operations management is a multi-department role where the manager takes on a wide range of responsibilities across various disciplines. In order to be successful in this role, operations managers must have the following skills:
Good coordination skills allow the operations manager to understand how to integrate resources, activities, and time to make sure that the resources are correctly used towards the achievement of the company’s goals. Coordination involves simultaneously carrying out specific activities along with switching easily between them. It also involves dealing with obstacles, interruptions, and crises, and planning the best ways to return to the normal routine functions to avoid any further issues.
Organization skills involve the ability of the operations manager to focus on a variety of projects without being distracted by the various processes involved. Operations managers should be able to plan, execute, and monitor the various projects that they work on from the beginning to the end without losing focus. When an operations manager is not organized, they will face several issues such as important documents becoming lost, uncompleted tasks piling up, and more time wasted trying to deal with these problems. Good organizational skills are essential for operations managers who want to save time and increase overall efficiency.
In an age where technology is advancing rapidly, operations managers need to be tech-savvy in order to be able to design processes that are tech-compliant and efficient. Today’s modern companies are becoming increasingly dependent on technology in order to gain a competitive market advantage. As a result of this, many of the processes that are conducted manually, like procurement, are transitioned to more efficient, automated processes. The latest innovations in the tech industry can be used to the advantage of the operations manager to improve internal processes when they are familiar with them.
Dealing with people is one of the main responsibilities of an operations manager. Because of this, they need to know how to relate to employees, other members of the management team, and outside stakeholders. Operations managers need to be aware of how to manage relationships with others by understanding how to communicate, listen, and relate to them on both a personal and professional level. Since most workplaces today include people from a range of cultures, operations managers need to be people who are tolerant and understanding of others.
Recent Operations Management Trends
Shrinking product lifecycles, new trends in the labor market, process digitalization and environmental concerns have all led to more innovative approaches to operations management becoming necessary. Some of the main trends that have impacted operations management in recent times include:
Lean and Agile Manufacturing
The term lean manufacturing was established by the Toyota Corporation and has become a mainstream trend in the industry. It is often used interchangeably with ‘Just in Time’ production. The concept behind this involves constantly improving processes to reduce waste as much as possible and keep minimal inventory, which ultimately maximizes the output of products and services that are low-cost and high-quality.
Business Process Reengineering
This involves a radical approach to designing core processes. It involves taking everything that you did before, discarding it, and then starting again from scratch. Business Process Reengineering allows operations managers to better foster innovation and significantly improve selected measures.
An innovation of Motorola from the mid-1980s, Six Sigma involves taking a data-driven approach to improve processes. It is still an impactful trend today, as it is a method that improves quality and reduces cost while focusing on customer satisfaction. It is based on the Six Sigma measure, which is only achieved when 3.4 defects are found in one million of output, allowing production efficiency to be at almost 100%. A five-step method known as DMAIC (define, measure, analyze, improve, control) is used in the Six Sigma approach when presented with a problem.
The increasing involvement of employees in the planning process is another recent trend involving the operations manager and other human resources management activities. Listening to worker opinions will often give operations managers a chance to hear about fresh new ideas, get a new perspective on solving problems and discuss different ways to make operations more efficient and effective.
Reconfigurable Manufacturing System
Another possible method that is used for reacting to quick market changes is the reconfigurable manufacturing system (RMS). This is a production system that can be used with various functionalities within a product family. An RMS allows you to make cost-effective adjustments to production.
Behavioral Operations Management
This refers to a trending research area that studies the impact of human behavior on the discipline, particularly in terms of non-rational decision making. Due to the fact that it is highly complex, operations management is a field that often becomes prone to deviances in problem solving. This trend is part of a growing and solid interest to understand some of the most important factors influencing the decisions of the operations manager, along with making efficient methods for solving problems more widely available within the field. This allows operations managers to have access to the tools necessary for them to make more rational decisions and improve overall operation efficiency.
Due to environmental regulations that are ever constraining, businesses need to be able to operate under pressure to reduce the harmful impact that they have, while still being able to grow. Since these issues affect all levels of operations, they need to have the insights of the operations manager when it comes to the options available to meet new environmental expectations. Most of the time, any principles that are applied to make processes more efficient will also overlap with sustainable operations management principles such as cutting waste or organizing resources.
Sixteen Principles of Operations Management
The book ‘World Class Manufacturing: The Next Decade’ by Dr. Richard J. Schonberger, a renowned American manufacturing researching, has become widely known in the field of operations management for its set of sixteen customer-focused principles. These are:
- Visibility Management: Tell the market about your improvements in productivity or competence and promote your corporate achievements.
- Fix Causes: More focus should be placed on controlling the main causes of any impacts on performance and cost.
- Total Quality Control: Only use the best processes, materials, and partners.
- Pull System: Produce on demand to cut waste and improve workflow.
- Cut Setup: Prepare to support various processes and ensure that all tools and information are easily available for on-demand production.
- Cut Times: Shorten the product path to the customer by speeding up processes and delivery.
- Minimize Human Error: Use automation, improve equipment, and ensure that frontline workers are accountable.
- Simple Equipment: Keep any equipment as simple and as flexible as possible.
- Maintain Equipment: Always consider ways to improve your equipment first before replacing it.
- Invest in HR: Offer rewards and recognitions, cross-training, and more job responsibilities along with improving workplace health and safety.
- Organize Resources: Prioritize based on how close the operations are to customer demand or rate of use.
- Focus: Do not allow any variations that customers do not demand or buy.
- Know the Competition: Understand their best practices, competitive edges, and customers.
- Unified Purpose: Involve frontline employees in decisions to give them a say and a better understanding of their work purpose.
- Rapid and Continual Improvement: Non-stop improvement should be aimed for in order to deliver the best quality, a quicker response to customer demand, and more flexibility.
- Team Up With Customers: Understand your customers, what they buy, and what they need.
If improving business processes and operations interests you, the role of an operations manager may be a good fit.