Operations managers in almost any business are key personnel in upper-level management that make sure the company is performing to its best potential. They keep their eyes on multiple areas within the company, assuring productivity and efficiency while seeking to reduce costs. They manage other key leaders within several departments and guide groups of people to complete their individual tasks in order to achieve company-wide goals.
A Big-Picture Perspective
Because they are responsible for the overall well-being of the company's operations, these types of managers tend to have a big-picture perspective. They are able to determine needs within the company and connect groups to work together to solve problems as they arise. They need to be critical thinkers who can analyze situations and make decisions geared toward the company's best interests rather than those of a single department. This may mean that they also need to resolve conflicts as they arise between employees and set policies and guidelines for how to complete tasks.
In terms of skills and abilities, operations managers need a healthy mix of hard and soft skills. Depending on the industry, managers may need mechanical aptitude and knowledge of manufacturing equipment, but most certainly will use computers and a variety of related software programs, including customer management tools and budgeting and accounting software. They also need to be able to manage people effectively using good listening, motivation and communication skills.
Oversight of Financial Information and Budgets
A large part of an operations manager's job is to oversee the creation and administration of budgets within each area of the company. Strong leaders will regularly monitor expenses and curtail a department's spending if necessary to keep the company on budget. They will also engage in cost-benefit analysis, seeking to obtain the best price for materials and oversee production methods so that output is at peak efficiency levels.
Supervise Supply Chain and Inventory
Another area of oversight is the management of supply chain procedures and inventory tracking. In order for the production teams to operate effectively they need to have a steady supply of materials. Similarly once their job is completed, finished products must be properly inventoried and then sent out the door and up the supply chain to retailers or direct customers. While each department is busily doing its specific job, operations managers have their eyes on the entire process and can intervene and make adjustments as needed.
Workflow and Staffing
Operations managers also have a good handle on the staffing requirements of the organization. They work with HR to hire and train new employees and handle disciplinary issues. Because they are aware of the needs in each department, they can adjust the workflow and reassign tasks to improve efficiency in the operation.
Operations Managers in Various Industries
While operations managers all use a wide variety of skills to do their job, some, particularly in large companies, may specialize in an area and focus within a particular department. For example someone with a strong background in human resources may become an HR operations manager, overseeing the entire department. Some of their specific responsibilities may include:
- Create and manage the department's budget
- Define company policies and implement training
- Monitor internal HR systems and ensure compliance
- Oversee hiring objectives and job description creation
- Stay on top of employment trends, legal issues and best practices
- Purchase software or other tools to improve department efficiency
Managing in a Small Operation
If a business is particularly small or offers a service rather than manufacturing a product, the terminology for this role may be slightly different. An office manager will typically function in a very similar capacity, supervising the overall functioning of business operations, including finances, staffing, policies, marketing and goal-setting. Whether the company is large or small, the position still is essential for the company's overall success.
What Is Operations Management (OM)?
Operations management (OM) is the administration of business practices to create the highest level of efficiency possible within an organization. It is concerned with converting materials and labor into goods and services as efficiently as possible to maximize the profit of an organization. Operations management teams attempt to balance costs with revenue to achieve the highest net operating profit possible.
Key Takeaways
- Operations management is the administration of business practices to create the highest level of efficiency possible within an organization.
- Operations management is concerned with converting materials and labor into goods and services as efficiently as possible.
- Corporate operations management professionals try to balance costs with revenue to maximize net operating profit.
Operations Management
Understanding Operations Management (OM)
Operations management involves utilizing resources from staff, materials, equipment, and technology. Operations managers acquire, develop, and deliver goods to clients based on client needs and the abilities of the company.
Operations management handles various strategic issues, including determining the size of manufacturing plants and project management methods and implementing the structure of information technology networks. Other operational issues include the management of inventory levels, including work-in-process levels and raw materials acquisition, quality control, materials handling, and maintenance policies.
Operations management entails studying the use of raw materials and ensuring minimal waste occurs. Operations managers utilize numerous formulas, such as the economic order quantity formula to determine when and how large of an inventory order to process and how much inventory to hold on hand.
The combination of understanding and coordinating the work of a company are central to becoming a successful operations manager.
Operations and Supply Chain Management
A critical function of operations management relates to the management of inventory through the supply chain. To be an effective operations management professional, one must be able to understand the processes that are essential to what a company does and get them to flow and work together seamlessly. The coordination involved in setting up business processes in an efficient way requires a solid understanding of logistics.
An operations management professional understands local and global trends, customer demand, and the available resources for production. Operations management approaches the acquisition of materials and the use of labor in a timely, cost-effective manner to deliver customer expectations. Inventory levels are monitored to ensure excessive quantities are on hand. Operations management is responsible for finding vendors that supply the appropriate goods at reasonable prices and have the ability to deliver the product when needed.
Another large facet of operations management involves the delivery of goods to customers. This includes ensuring products are delivered within the agreed time commitment. Operations management also typically follows up with customers to ensure the products meet quality and functionality needs. Finally, operations management takes the feedback received and distributes the relevant information to each department to use in process improvement.
Special Considerations
Operations managers are involved in coordinating and developing new processes while reevaluating current structures. Organization and productivity are two key drivers of being an operations manager, and the work often requires versatility and innovation.
An MBA in operations management can give someone a global perspective on industry trends and an awareness of any financial regulations and political uncertainties that can affect an organization. It also gives someone a solid grasp of the inherent complexities and the tools needed to respond well to change.
What Is the Purpose of Operations Management (OM)?
Operations management is concerned with controlling the production process and business operations in the most efficient manner possible. OM professionals attempt to balance operating costs with revenue to maximize net operating profit.
What Are Some Systems of OM?
Modern operations management revolves around four theories: business process redesign (BPR), reconfigurable manufacturing systems, Six Sigma, and lean manufacturing. BPR is focused on analyzing and designing workflow and business processes within a company. The goal of BPR is to help companies dramatically restructure the organization by designing the business process from the ground up. Reconfigurable manufacturing systems are designed to incorporate accelerated change in structure, hardware, and software components.
This allows systems to adjust rapidly to the capacity to which they can continue production and how efficiently they function in response to market or intrinsic system changes. Six Sigma is an approach that focuses on quality. The word "six" references the control limits, which are placed at six standard deviations from the normal distribution mean. Tools used within the Six Sigma process include trending charts, potential defect calculations, and other ratios. Lean manufacturing is a systematic elimination of waste within the manufacturing process. This theory sees resource use for any reason other than value creation for customers as wasteful and seeks to eliminate wasteful resource expenditures as much as possible.
What Is an Example of Operations Management?
Operations management is prevalent in the healthcare sector. The current healthcare system overuses expensive, technological, and emergency-based treatment. High costs from care often remain uncompensated due to uninsured patients. A prevalence of services in expensive settings creates a burden on taxpayers, health insurance holders, and healthcare institutions themselves.