By Anne Evenson
If your role requires a thorough understanding of how to convert materials and labor into goods and services, you need to understand operations management.
“We are what we repeatedly do. Excellence, then, is not an act, but a habit.”
Aristotle, Greek Philosopher
Operations management, and its various moving parts, is the engine that drives every organization’s success. Smart leaders know that strategic planning and efficient process implementation are necessary to remain competitive. Savvy entrepreneurs understand that it’s essential to maximize efficiency, productivity and profit to compete successfully in an ever-changing market.
One Role, Many Moving Parts
Operations management is the planning, production and supervision of the delivery of goods or services to market. It is a complex series of interconnected processes that involve every aspect of operating a business, from materials, equipment and facilities to technology, funding and personnel.
Operations managers are often involved in the strategic planning and day-to-day production of manufacturing or services and frequently operate in a cross-functional capacity with other departments such as sales, marketing, finance, human resources and executive leadership.
Operations management in an organization of any size entails executing the company’s strategic plan. Operations managers must regularly plan, forecast and adapt to streamline processes based on existing conditions.
Product and service planning includes market research that clarifies the demand for specific products and services and how companies can distribute them to consumers. These statistical studies can also help determine pricing structures, identify competitors and potential collaborators, and offer strategic advertising and promotion data. Market research and feasibility studies can refine the product or service description and aid in creating a prototype.
Forecasting is making future predictions based on past and present data to predict market demand drivers over different time horizons. Forecasts are prepared using qualitative and quantitative data and create estimates that can determine possible future business outcomes. Operations managers use forecasting to develop and implement production strategies.
Job design is the allocation of specific work tasks and responsibilities to individuals and groups within an organization. Job design outlines the content, method and relationships necessary to satisfy technological and organizational requirements and jobholders’ objectives. Some organizations use job design to boost productivity as it’s an ever-evolving process that helps employees adjust to changes in the workplace.
Production management uses a company’s resources to create goods and services. It includes product development, production planning and control, and workforce organization and supervision. It generally comprises a significant portion of a company’s cost structure and must be managed wisely.
Product development is the determination of the features and characteristics of a product or service. This process evaluates consumer needs, desires, and preferences necessary to guide product development plans, resulting in a detailed product or service design. The resources used in production, and the information systems required to monitor and control performance, are all part of the manufacturing process, which is integral to the ultimate success or failure of the product or service.
Production planning refers to the production and manufacturing system that a company or industry uses to fulfill orders and serve customers. Operations managers use short, medium and long-term production planning to allocate the resources necessary to create a desired product or service.
Production control uses various methods to achieve optimum performance from the production system to achieve overall production planning targets. The objectives are to regulate inventory management, organize production schedules and optimize the resources and production process.
Inventory management is the process of acquiring, storing and moving an organization’s inventory. Having the right products and quantities in the right place at the right time ensures that minimal waste occurs within the supply chain.
Production scheduling involves coordinating equipment, people and production activities to ensure that the operations system is highly effective and efficient.
Implementing and managing robust, repeatable processes is a critical component in the production of goods or services. Operations managers must continuously supervise these processes to keep everything aligned.
Workflow management creates and optimizes the flow of activities through a system, including its input, processes, outputs and outcomes. This process mapping identifies redundant tasks, automates the process, and pinpoints areas for improvement.
A value chain is a business model that illustrates all the activities performed to design, create, market, deliver and support a product or service. Value chains track things like raw materials procurement, manufacturing functions, and marketing and distribution.
Effective operations managers use various tactics to increase efficiency, like resolving production problems such as bottlenecks, insufficient resources and stoppage to eliminate waste and optimize resource usage.
Another critical function related to managing operations is the delivery of products or services on time. The management of transportation and distribution and customer satisfaction are key components of delivery systems. Operations management is responsible for monitoring customer satisfaction related to product quality standards and functionality needs and distributing this feedback to the relevant department for process improvement.
Technology is the infrastructure that underpins all these foundations, and implementing the right information systems is critical to ensuring the success of the entire network of operations. The best operations managers invest in innovative and robust technology that is easy to navigate by both consumers and employees at every skill level.
It All Depends on Operations Management
Understanding how local and global trends, customer demand and the available resources for production can be tied together seamlessly is the essence of operations management. An impeccable product or service, excellent customer service, innovative and service-oriented design all directly affect your market competitiveness and overall profit margins. It’s not an overstatement to say that everything depends on operations management.
Whether you want to be your own operations manager or plan to delegate that responsibility, working on developing business analysis and project management skills is an investment in your success. Start building those skills in Business Analysis Essentials and Principles of Project Management, two courses offered by UT Austin’s Center for Professional Development.
Anne Evenson is a native Austinite and a proud Veteran’s spouse with over 20 years of marketing, communications and program coordination experience in the public, private and nonprofit sectors. She is also a sculptor, jeweler and all-around dabbler in the arts and loves to help military-connected individuals discover their inner creativity.
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